Effect Of Innovative Strategies On The Performance Of Small And Medium Enterprises In Nairobi County, Kenya

Abstract

In a “progressively challenging environment, innovation is extensively considered as the most vital source of competitiveness, because it creates a constant improvement that assists the organizations to endure, it leads to product and process enhancements, be more efficient. Innovation is often a necessity for organizations with strictly limited funds and resources yet are trying to remain profitable and competitive. Therefore, this study sought to establish the influence innovation strategies on performance of small and medium enterprises in Nairobi City County. The specific objectives are to determine the effect of product innovation, service innovation, marketing innovation and process innovation on organizational performance in SMEs. Theories informing the study include diffusion innovation theory, resource based view theory and Technology Acceptance Theory. The study used a descriptive research design. A total of 398 Small and Medium Enterprises was used where the enterprise owners was used as the respondents. Primary data was collected through the administration of the questionnaires. Descriptive and inferential statistics analysis was conducted. A regression model was used to determine the effect of innovation strategies on performance of Small and Medium Enterprises in Nairobi County. The regression of coefficients results show that product innovation and organizational performance of SMEs is positively and significantly related. The results further indicated that service innovation and organizational performance of SMEs is positively and significantly related. The results further indicated that marketing innovation and organizational performance of SMEs is positively and significantly related. Lastly, results showed that process innovation and organizational performance of SMEs is positively and significantly related. The study concluded that that innovation strategies positively influences performance of SMEs in Kenya. The study recommends that the SMEs should invest in innovative technology so as to survive intense competition currently experienced in the SMEs. Further the study recommends that the SMEs should continuously produce new products and re-engineer existing products so as to prolong the product life cycle. Further, the study recommends that the SMEs should design an innovative marketing strategy that makes customers feel a part of the enterprise through social responsibility and promotions. The study recommended that the SMEs should invest in bench-marking with the technology in the industry.”