Moderating Effect of Entrepreneurial Orientation on the Relationship between Clustering and Product Innovativeness of Manufacturing Micro and Small Enterprises in Kisumu City, Kenya

Abstract

Over the last two decades, the role of clusters and regional innovation systems has received much attention in research. Despite the widely held view that clustering can play an important role in fostering incipient industrial development, especially in poor regions and also enhance MSEs‘ ability to innovate, little is known of the effect that clustering has on product innovativeness of manufacturing MSEs in developing countries such as Kenya, thus giving impetus to the current study whose focus was in Kisumu City. Using a cross-sectional survey design and specific MSEs as the units of analysis, a sample 196 MSEs was obtained based on Krejcie and Morgan‘s (1970) table. Data was collected purposively from respondent entrepreneurs using questionnaires and observation of innovative products. Cronbach‘s alpha was used to determine reliability; item analyses and experts' consensus were applied for validity. Logistic regression analyses were applied in analyzing the data. The results revealed that suppliers‘ proximity, customer proximity, and collaboration had significant positive effects on product innovativeness of manufacturing MSEs. However, knowledge spillover had an insignificant effect on product innovativeness of manufacturing MSEs. Independently, entrepreneurial orientation has a significant effect on product innovativeness. However, the results of the moderating effect of entrepreneurial orientation on the relationship between clustering and product innovativeness were insignificant. In view of these findings, the study concluded that clustering does indeed have a positive effect on manufacturing MSEs product innovativeness. Given that firm-level innovativeness demands proactiveness in exploring new methods of manufacturing products that may not necessarily reside in clusters, it would be prudent that manufacturing MSEs maintain their close ―cooperative competition‖ in order to acquire new product knowledge, production technology, and market information from suppliers, customers and collaborating research institutions / universities in order to manufacture novel and unique products. There is need for the government to invest in research institutions / universities product development platforms as they are pivotal to developing, strengthening and enhancing cluster MSEs products innovativeness