Innovation challenges encountered by Small and Medium Enterprises in Nairobi

Abstract

The current business environment exists of tough and unpredictable competitions. All organizations, regardless of their size and scope of operation are faced with tough competition challenges and in order for them to cope with this state of affairs; SMEs are turning to innovation in order to stay afloat. Kenya has a sizeable SME sector that the government is making efforts to grow and develop. Recent studies have looked at the effective factors which are seen to lead to the increase in SME innovativeness and performance. However, there is still a gap in knowledge that this study aims at addressing by attempting to answer the question what innovation challenges do SMEs in Nairobi encounter? This study applied descriptive research design and made a focus of the target population was the 100 small and medium companies in the top 100 medium sized companies‟ East Africa 2016. Data collection instrument in this study was through use of questionnaires and analyzed through Descriptive statistics such as percentages, means, frequencies and standard deviation. One of the major findings of the study was that the level of innovativeness in the businesses varies from one business to another, where, 41% of the businesses report to have good innovation levels, 32% have average level, 19% are excellent in innovation while 8% are poor. Regardless of the level of innovation, 45% of the businesses still find innovation very challenging, 37% of the businesses find innovation moderately challenging while the remaining 18% find innovation not challenging at all. Another major finding of the study was that are several innovation challenges that affect SMEs in Nairobi. The findings from primary data show that the innovation challenges can be categorized as knowledge based challenges, Resource based Challenges, Technological based Challenges, Legal and Policy based Challenges and Environmental based Challenges. The study therefore recommended that SMEs should partner with other large corporations that offer varying services to jointly invest in common innovative activities as doing so leads to cost reduction while achieving similar goals.