ORGANIZATIONAL INNOVATIVENESS AND FIRM PERFORMANCE OF SMALLAND MEDIUM CAR BURSARS (SMES) IN KENYA: A CASE STUDY OF EUREKA MOTORS

Abstract

The role of small and medium enterprises (SMEs) in economic development and employment creation has occupied most of the discussions among government, policy makers, academicians, researchers, scholars and economists globally. This study investigated the effect of innovative processes that Kenyan SMEs employ on their firm performance. The study's objectives were to find out how product innovation affects performance of medium enterprises in Kenya, to assess the extent to which process innovation affect performance of medium enterprises in Kenya and to investigate how market innovation affect performance of medium enterprises in Kenya. Findings from the study are expected to aid the government in formulating good policies to assist the SME sector, assist practicing entrepreneurs to perfect their business operations and enable academicians and researchers to find new knowledge to rely on while conducting further research on the SME sector. The study adopted cross sectional design which seek to establish the relationship between innovative processes and firm performance over the five years' period (2013 to 2018) and collected primary data using self-administered questionnaires. From the findings, the study realized that the firm is a sole proprietorship formed over ten years ago and that its Profits have not been stable. It has not been using product nor process innovations due to their costs and technical expertise involve and hence these have had no effect on the firm's performance. However, market innovation which is the only organizational innovativeness used by the firm had positively enhanced the firm's performance according to the study. The study therefore concluded that the firm has not been doing well due to its inability to implementing all the three innovative processes. Among the study recommendations is that the firm need to start doing product innovations; and subcontract for parts not implementable immediately as their effects are very beneficial to firm performance; and should do away with process innovation as it is risky and very expensive to the firm.