Entrepreneurial innovation processes and firm performance in Kenya

Abstract

Despite their contributions to income and employment creation, small and medium enterprises (SMEs) in general are currently faced with many problems. These SMEs are facing tough business environment characterized by competition and dynamic change in customers' demands and preference. As a consequence, most SMEs do not survive up to their fifth birthday. The study therefore sought to establish the effect of innovation on performance of entrepreneurship businesses with a focus on Small and Medium Enterprises in Nairobi City County. The specific objectives that guided the paper were to establish the influence of product innovation on performance of Small and Medium Enterprises in Nairobi City County, to determine the influence of process innovation on performance of Small and Medium Enterprises in Nairobi City County and to establish the influence of market innovation on performance of Small and Medium Enterprises in Nairobi City County. It employed a descriptive research design. The target population was about 10,000 SMEs in Nairobi City County. Fisher's formula was used to calculate a sample of 106 SMEs. Stratified random sampling technique was used to select the sample and questionnaires were the main instrument for data collection. Regression analysis results showed that product innovation, process innovation as well as market innovation all were positive and had statistically significant relationship with performance of entrepreneurship businesses in Nairobi City County. The study recommends that SMEs firm should produce new products and services that are specifically tailored to suit market needs, adopt a step by step technique when designing product and services for guaranteed quality and that they need to pursue market innovation strategies that focus on product customization and customer intimacy in delivering their products and services while at the same time cultivating relationships with a small number of captive customers.