Technological Innovation and Competitiveness of Agribusiness Firms in Kenya

Abstract

The objective of this study was to determine the effects of innovation on competitiveness in the agribusiness firms in Kenya. The research aimed to establish the extent to which technological innovations are used by the firms, to determine the relationship between technological innovations and competitiveness in the firms, and to establish the challenges facing the technological innovations and competitiveness in the firms. The study adopted a cross sectional survey research design. Data was collected from the firms that produce and export coffee, tea and horticultural produce using a questionnaire that was designed in Google Forms and administered through phone interviews. The data was analyzed using descriptive statistics for the first and third objective while regression analysis was used for the second objective. Focusing on the extent to which technological innovations are used by the agribusiness firms, the research established that virtual market innovations were used by 37.8% of the firms, virtual pricing innovations were used by 17.8% of firms, and mobile money innovations were used by 11.1% of the firms. The farmer library innovations were available in only 4.4% of firms. The horticultural sector exhibited the greatest depth in diffusion of innovations. Overall, there was moderate use of technological innovations in the agribusiness firms involved in the study. On the relationship between technological innovation and competitiveness of the agribusiness firm’s data on the quantity and value of exports were sort over the last three years. The average price of exports for 31.1% of the firms was reported to be higher price than the global price, 53.3% reported no difference, while 15.6% reported lower prices compared to the global price. Overall 33.3% of the firms were more competitive while 15.6% were less competitive. The horticulture industry was the most uncompetitive where only 1 firm sold at a higher price compared 6 firms in the tea sector and 7 firms in the coffee sector. The firms view the influence of technological innovations on pricing to be small for 51.1% of firms and much for 8.9% of firms. Overall, the study found small to moderate effect of technological innovations on competitiveness of agribusiness firms in Kenya. Ordinal regression analysis resulted in the model fitting information that would correctly predict the output up to 77.77% being significant at 5% confidence interval where p is 0.004. The goodness of fit model produced p at 0.994 of the null hypotheses rejecting it and indicating that the model was good fit for the data. The pseudo r-square was recorded at 0.419 indicating variable could be explained at 41.9%. On the challenges facing the adoption of technological innovations in the agribusiness firms, the cost of technologies was seen as the greatest challenge being reported by 68.9% of the firms while changes in government regulations and standards was cited by 15.6% there was no citation of multilateral and bilateral trade agreements. The greatest challenge facing creation of strategic competitive advantage for the agribusiness firms was changes in standards required for export goods in 44.44% and changes in government regulations in 37.78% of the firms.