Innovation is noted to be a necessary ingredient for the sustained success of firms. It protects both tangible and intangible assets against the erosion of the market. In Kenya, the tea industry has been hit by a downward trend in prices against the backdrop of rising production costs, the highest being labour costs. Some tea firms in Kericho have initiated mechanical tea harvesting operations, in an attempt to mitigate the rising production costs and stiff competition. This has been undertaken as an innovative measure to ensure the success of the respective tea firms. Though the initiatives seem to play in favour of the owners of the tea firms, it has been met with mixed reactions, from varied centers. First, there is incongruency between the factories processing capabilities and the availability of mechanically harvested leaf. Second, there is a feeling and resistance amongst the labourers, that machines are likely to push them out of productive employment. The major objective of this study was to establish effects of innovation on performance of tea firms in Kericho town Kenya. The study used both primary and secondary data from sampled respondents. The research was primarily a correlational where by Kericho town was representative because of the concentration of major multinational tea firms in the country. The population of the study comprised of a five major tea firms in Kericho town. A stratified random sampling technique was used. Results were analyzed using measures of central tendency like mean, mode and median to present qualitative findings. Regression analysis was used to establish the relationships between innovation dimensions and performance indications. The study revealed that innovative strategies adopted resulted into increased revenues, high productivity levels and reduced costs. . The study therefore recommends the tea mechanical harvesting operations as an important method of adopting innovation.