Strategy Innovation and Competitive Advantage Among Small and Medium Enterprises in Nairobi Kenya

Abstract

Organizations are today confronted with the difficulty of achieving sustainable growth, that compels companies to consider strategies for enhancing their competitiveness in the unforeseeable future. The increased competition in the Small and Medium Enterprises (SMEs) sector has forced them to invest in strategy innovation that would improve internal processes, promote efficiency and make them competitive. This study sought to assess the effect of strategy innovation on competitive advantage among small and medium enterprises in Nairobi, Kenya. Specifically, the study sought to establish the nature of strategy innovation among SMEs and determine the effect of strategy innovation on competitive advantage among SMEs in Nairobi City County, Kenya. The study was anchored on disruptive innovations theory supported by Schumpeter’s theory of innovation and Michael Porter’s theory of competitive advantage. The study adopted a cross sectional survey design. The study population was all the 60761 licensed SMEs in Nairobi City County with 100 SMEs sampled randomly and calculated using Yamane (1967). The study collected primary data gathered using a structured questionnaire administered through the interview method. The study used descriptive and regression statistics for analysis. On product innovations, the study found that the firms had invested in advanced product qualities and new product development for improved product offering. However, the information from customers was not collected with market trends not monitored. On process innovations, the companies had invested in new state of technology but not new production methods for efficient operations. Despite the companies utilizing customer feedback in enhancing business processes, they failed to expedite new standards. On market innovations, the companies had invested in new markets, redesigning of their product offerings and extension of existing brands. The companies, however, had failed to analyze market trends and pursue completely new markets. On competitive advantage, the findings showed that the competitive advantage was low among the SMEs. This was shown by limited product offering to customers, low market share, limited ventures into new markets; and low revenue levels as well as production efficiency in their firms. The regression findings showed that there was a strong relationship between strategy innovations (product, process and market) and competitive advantage. The findings also showed that the strategy innovations of product, process and market had a positive and significant effect on competitive advantage. The study conclude that SMEs in Nairobi City County have adopted strategy innovations in their business. The study also concludes that the competitive advantage among SMEs in Nairobi City County is low. The product, process and market innovations have a positive and significant effect on competitive advantage of SMEs in Nairobi City County, Kenya. The study recommends that SMEs in Nairobi City County increase their strategy innovations in their products, processes and markets for increased competitive advantage. Similar studies are recommended based on other influencers of competitive advantage, other organizations and other strategy innovations.