The Effects Of Strategic Innovation On The Performance Of Smes In Nairobi County

A Research Project Report Submitted to the School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA)The purpose of this study was to establish the effects of strategic innovation on the performance of Small and Medium Enterprises in Nairobi County. The study assessed the effects of Product innovation on performance; evaluated the effects of Process innovation on performance; and examined the effects of market innovation on performance. The underlying concepts of each research objectives were also examined. The research methodology employed for the study was the descriptive research method. The target was owners and employees of small and medium enterprises operating in Nairobi County. The sample frame for the study was drawn from Small and medium Enterprises operating within the Nairobi central district which was 534 SMEs. From this a sample size of 138 SMEs was chosen using simple random sampling technique. To facilitate the process of data collection, questionnaires which contained structured and opened ended questions, were issued to the respondents and informal interviews were also conducted so as to ensure data accuracy. The data collected was analyzed using descriptive statistics with Statistical Package for Social science (SPSS) and Microsoft Excel as tools of analysis. The data analysis involved tables, charts, frequency distribution charts, percentages, regression analysis and standard deviations and the data is presented inform of tables and figures. The study established that there is a positive relationship between strategic innovation and performance. There was a significantly strong relationship among the three variables of the study. The study found that innovations of new products improved the performance of the SMEs. As part of product innovation strategy, some companies and businesses have incorporated employee motivation and reward for any product innovation idea they develop. It was determined the organizations vision and mission played a critical role in strategic innovation. Further it was established that SMEs have adopted several process innovations in order to gain a competitive advantage.It was also established that some businesses did business researches on the need of the customers and other engaged on pricing strategies which substantially improved their overall performance. The study concluded that in order to enhance performance and gain a competitive advantage the SMEs had to undertake strategic innovation. It was also noted Resources and a firms capabilities were also regarded as a key component for successful strategic innovation. It can be noted that the success of strategic innovation also depends of the knowledge and leadership skills of the organizations management. The study recommends management of SMEs align employee participation in their product development strategies to ensure all staff members take part in product development. Further it is proposed SMEs invest in new systems and processes such as inventory management systems to benefit the advantages associated with such technologies. In conclusion SMEs should embark on serious and strategic marketing with different strategies which can enable them to outperform their competitors and maintain their market share as well as their competitive edge