The Effect of Product and Service Innovation on the Performance of Micro, Small and Medium Enterprises in Kenya

Authors

  • Kimathi Doreen Kawira Jomo Kenyatta University of Agriculture and Technology

Abstract

Micro, Small and Medium Enterprises (MSMEs) play a pivotal role of improving social sectors through stimulating large scale employment, development of indigenous skills and technology, promoting entrepreneurship and innovativeness and building an industrial base at different scales. MSMEs continue to suffer various setbacks of slowed growth and performance catapulted by unfavorable environmental conditions with an estimated 70% folding up by the third year of operation. The SME sector in Kenya is critical and strategic in attaining vision 2030 and is central in national strategies for stimulating economic activity, reducing unemployment and poverty. This study assessed the effect of product and service innovation on the performance of Micro, Small and Medium Enterprises (MSMEs) in Kenya. The study was guided by positivism research philosophy. It utilized a descriptive survey design. The study population included 8,526 licensed MSMEs in Tharaka-Nithi County. Stratified sampling and random sampling techniques were employed to arrive at the study sample size of 368 MSME owners/managers. Data was collected using questionnaires through hand and delivery procedure. Quantitative data was analyzed using both the descriptive statistics and inferential statistics. The results of this study ascertained a significant positive effect of product/service innovation on the performance of MSMEs. Specifically, the regression results produced a coefficient of (?= 0.676, p < .05, Sig 000). This means that for every unit increase in product/service innovation, performance increased by 0.676 units other factors held constant. Pearson product moment correlation coefficient (r = 0.701, p-value =0.000< 0.05) establishes a positive significant correlation between product/service innovation and performance of MSMEs. Hence, the study supported the alternative hypotheses. Based on the findings of this study, it can be concluded that product/service innovation significantly enhances performance of the MSMEs in Kenya. Thus, product/service innovation achieved through introduction of new/improved products/services and enhanced service quality presents an opportunity for entrepreneurial firms to gain traction through the temporary gains accruing from an innovation and a necessary continuous activity for long term entrepreneurial success. The study recommends that MSME owners/ managers should be more proactive towards product/service innovations, pay attention to changes happening in the operating environment and adjust their competitive strategies appropriately to stay ahead of competition. The entrepreneurs are urged to proactively introduce new/improved products/services while enhancing service quality.

Keywords: Product and Service Innovation, Performance of Micro, Small and Medium Enterprises,   Tharaka-Nithi County

 

Author Biography

Kimathi Doreen Kawira, Jomo Kenyatta University of Agriculture and Technology

Jomo Kenyatta University of Agriculture and Technology

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Published

2021-02-25

How to Cite

Kawira, K. D. (2021). The Effect of Product and Service Innovation on the Performance of Micro, Small and Medium Enterprises in Kenya. Journal of Marketing and Communication, 4(1), 1–16. Retrieved from https://stratfordjournals.org/journals/index.php/journal-of-marketing/article/view/681

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