| dc.description.abstract | SMEs play a crucial role in employment, wealth creation and economic development in
any country across the globe. Their importance is more so crucial in Kenya where the
poverty rate stands at forty two percent and unemployment rate at forty percent. They
create eighty percent of employment and contribute twenty percent to the national gross
domestic product. However, sixty percent of these firms fail within the first three years of
operation. This has necessitated a rethink of how SMEs operate. This has resulted in
these firms innovating. This study was conduction to determine the effect of innovation
on the operational performance of small and medium enterprises in Nairobi County. The
objectives of the study were to identify innovations practiced, identify the factors that
influence adoption of innovation and determine the effect these innovations had on the
operational performance of these firms. The researcher used a cross-sectional descriptive
research design for this research. The population of the study was small and medium
enterprises in Nairobi County. The researcher used judgmental sampling method to select
one hundred and fifty SMEs to represent the population. Questionnaires were used as the
tools for data collection. The data was analyzed using descriptive statistics such as
means, standard deviations and frequency distributions. The findings from the study
established that innovation was widely practiced in SMEs. Factors such as employee
training programs, competitive pressures and market segments served were identified to
have a large influence on adoption of innovation. The study also established that
innovation resulted in improved operational performance in the practicing firms. It was
recommended that SMEs in Nairobi County should continually practice innovations this
would lead to better performance. The study also recommended that the government
should offer incentives for innovation and also roll out training programs for owners and
employees of these firms. | en_US |
