Determinants of Innovation Among Small and Medium-sized Enterprises in Nyeri Town, Kenya

Abstract

The objective of the study was to establish the determinant of innovation among small and medium-sized enterprises (SMEs) in Nyeri, Kenya. The independent variables in this study included Customer Characteristics, Market Structure, Product Characteristics, Availability of Resources and Competitive Rivalry while the dependent variable was innovation among SMEs. This research aimed at establishing how the five independent variables presented effect the dependent variable. The study adopted a descriptive survey research design of SMEs in Nyeri, Kenya. The target population was five hundred and twenty one (521) SMEs in Nyeri town. Stratified random sampling with proportional allocation was used to come up with a representative proportion of sample of 156 respondents. Data was analyzed using descriptive and inferential Statistics using Regression, Correlations and Durbin Watson‟s multi-colinearity analysis models as supported by SPSS software. Tables and graphs presentations were used to present the data collected for ease of understanding and analysis. The findings indicated that two of the regression coefficients are highly significant at a confidence level of 95 % (see p- values). The coefficient are that for the customer characteristics and availability of Resources. However, the influence of the other variables i.e. Competitive Rivalry, Market Structure and Product Characteristics is insignificant as indicated by the p – values. The study recommends that SMEs should pay more attention to the various customer characteristics such as Tastes & Preferences, Peer Pressure, and Exposure to Social Media, Income Level and Motivation for Purchase to enhance innovation of their products and services. Resource Availability was also found to be statistically significant in influencing innovation among SMEs. The government agencies such as Ministry of Finance and financial institutions should develop policies to enhance access to various resources such as capital at affordable costs. This in turn will enhance innovation among SMEs.