Influence Of Product Innovations and Technology On Growth Of Small And Medium Enterprises In Petroleum Industry In Nairobi County In Kenya

Abstract

The main objective of this study was determining the influence of product innovation on the growth of Small and Medium Enterprises (SMEs) with focus on the petroleum industry in Nairobi County in Kenya. Product innovation is vital source of sustainable competitive advantage for any firm especially in a dynamic business environment. This is because product innovation leads to continuous product improvements that make the firm to survive in face of competitors. Product innovation may be internal or external. The specific objective were to determine the contribution of internal product innovation on the growth and to determine the effect of external product innovation on the growth. The study was anchored on diffusion theory of innovation, resource based view, product life cycle and innovation theory. The study was descriptive employing survey methods. The population was all the 986 SMEs in Nairobi County that sell ptroleum products. The study targeted a sample of 119 participants but only 81 successfully participated leading to a response rate of 68.07 percent. Data were collected using a questionnaire. Analysis was done using descriptive statistics. Graphical presentations were also used. Linear regression analysis was used to model the relationship connecting product innovation and growth. The study established that SMEs were generally growing with internal product innovation as a positive contributor to the growth. The SMEs focused only on things they could sustain, they spend more on market leadership and on strategic alliances especially on new projects. They, however did not have their own unique products availed for customers and did not have the technology to enable them to detect early enough whether a new product is profitable. External product innovation did not contribute favourably to growth of the SMEs despite the SMEs having strong policies on collaboration with other firms. However, the SMEs were inadequate in acquiring new ideas from external sources, did not invest heavily in technology and did not participate in in pooled R&D/product development. The study recommends stronger implementation of both internal and external innovation to enhance the growth of SMEs in the petroleum industry.