The impact of innovations on financial performance of small and medium enterprises in starehe constituency, Nairobi county
The recent advancement in information technology has impacted heavily on SMEs ability to innovate hence impacting on their financial performance. This study therefore sought to investigate what is the impact of innovations on the financial performance of SMEs in Starehe Constituency, Nairobi County. The main objective of this study was to investigate the impacts of innovations on financial performance of SMEs in Starehe Constituency, Nairobi County. The theories include disruptive innovation theory, innovator's dilemma theory and innovator's solution theory. For the purpose of this study descriptive survey research design was used. The study population was SMEs located within Starehe Constituency in Nairobi County. A total of 72 questionnaires were given to business managers and owners which represent 10% of the population planned. This study utilized a questionnaire to collect primary data. This study collected quantitative data using a self-administered questionnaire. Data was analysed using SPSS where the findings were presented in form of tables and figures. Regression line was also developed. The study concluded that innovations ensure that there is improvement in routines, procedures and processes employed to execute firm activities. Enhancing current products leads to improved ease of use by customers and improved customer satisfaction. It also decreases manufacturing cost in components and materials of current products. It further concluded that marketing approach of current and/or new products can be improved. This can be done through changes such as altering appearance, packaging, shape and volume without changing their basic technical and functional features. The study recommends that management of the SMEs should adopt new or beneficial innovations. This is because innovations can be used to facilitate coordination between different functions such as marketing and manufacturing thus resulting to a better firm performance. SMEs marketing departments should consider improving the product promotion techniques employed for the promotion of the current and/or new products offered by the SMEs, this helps to reduce the cost on product promotion.