Factors influencing product innovation among medium and large manufacturing firms

Abstract

Product innovation in Kenya has been on the increase. Although its importance has been recognized, our understanding of the factors that have influenced firms to introduce new products is limited. The study contained in this report sought to determine Lhe factors that influenced the introduction of new products by firms in , Nairobi. It also sought-to establish the forms of product innovation they had undertaken. In order to achieve the objectives, primary data was collected from a sample of thirty - two large and medium - sized manufacturing firms that had carried out product innovation. All the thirty - two firms were located in Nairobi. The method of data collection was by a self - administered questionnaire that was dropped and picked later from the marketing or production manager (in cases where the former was absent). Once the data was collected, mean scores and proportions were computed in order to determine the factors as well as the forms of product innovation. Factor rankings was also done to calculate the coefficient of concordance. This was done in order to establish if there was agreement in the ranking of factors by the firms. Subsequently, the most influential to the least influentinl factor was determined upon confirmation that the coefficient was significant. ( v ) The data analysis revealed that the influential factors were: customer orientation, level of competition, availability of capital, technology, availability of skilled labour, availability of a research and development department, training and experience, and educational background of the Marketing or Production Manager. The analysis on the forms of product innovation showed that most of the firms (51.1 %) introduced additions to existing product lines. The others (in order of their importance) were: , new product lines, improved products and products that were new to the world . No single firm had introduced a new product that offered similar performance to the consumer at lower costs. The findings from the analysis led to the conclusions that: " (i) The most influential factors were customer orientation and the level of competition. (i i ) • I The least influential were the educational background and -. training/experience of Lhp managers interviewed. (iii) Other factors that had an influence though not like the first two were availability of capital, technology, availability of skilled labour, and availability of a research and development department. (iv) The most commonly introduced new products by the firms consisted of additions to ~existing product lines.

Based on the findings, it was recommended that the level of competition and the customer orientation should be taken into account when introducing new products and that product innovation should be in the form of additions to existing product lines.