Innovation and performance of micro and small enterprises in Kiambu Town

Abstract

Today, Micro and small enterprises around the world are paying more attention to innovation. The benefits of innovation according to a study conducted in Pakistan by (Hafeez, 2013), include increasing Profit/Margins increase, Product diversification and differentiation, to meet and exceed needs, securing a market strategic position, to make use of new business opportunities, create a brand, improve product quality, create new markets, maintain market share, meet government regulations, standards and legislation, lower production costs, improve working environment, improve product flexibility, reduce environment damage, replace products being faced out. The general Objective of the study was to investigate Innovation and performance of MSEs in Kiambu Town especially to determine extent of innovation among the MSEs, establish the benefits of innovation to the MSEs, determine the challenges of adopting innovation in MSEs and to establish the relationship between innovation and performance of the MSEs. The study used descriptive research design to relationship between innovation and performance of MSEs in Kiambu Town. The target population of this study comprised of the Licensed MSEs in Kiambu Town. The town was targeted because of the variety of MSEs operating there, from Wholesalers to informal sector to transport, agriculture, hospitality, technical services, private education and health, and manufactures. A questionnaire with open ended and closed ended questions was developed by the researcher and used in data collection. The study found and concluded that Process, Product, Positioning and Paradigm types of innovation had a positive relationship with the performance of some business types of the Micro and Small Enterprises in Kiambu Town. It was recommended that embracing innovation after research on which suits which Micro and Small enterprise best. The study further proposed several considerations: Having mechanisms to implement tax incentives, involving key stakeholders in the business types and academia in R&D, develop policies to encourage innovation listed in this study, identify and reward innovative MSEs to promote innovation, initiate programs that tap innovators, and encourage Banks and other stakeholders to fund more viable innovative ideas