Innovation challenges encountered by small and medium enterprises in Nairobi, Kenya

Abstract

The current business environment is characterized by 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 affai rs, 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 innovat iveness and performance. However, there is still a gap in knowledge that this study aimed at addressing by attempting to answer the question, what innovation challenges do SMEs in Nairobi encounter? This study applied descriptive research design and the ta rget population was all the registered Small and Medium Enterprises in Nairobi. The study employed purposive sampling technique where only 100 small and medium enterprises listed in the top 100 medium sized companies in the East African region in the year 2016 were picked as the sample. Data was collected using questionnaires and was 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 innovativen ess 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 bus inesses still find innovation very challenging, 37% of the businesses find innovation moderately challenging while the remaining 18% find innovation not challenging at all. The study further found out that several innovation challenges that affect SMEs in Nairobi are 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 because doing so leads to cost reduction while achieving similar goals.