Determinants of innovation performance in youth entreprises in Kenya

Abstract

Youth enterprises play a key role in poverty alleviation and if they are ran innovatively, growth and sustainability would be assured and unemployment problems would be easily addressed. This study sought to investigate the determinants of innovation performance in youth enterprises in Kenya ,focusing on youth led enterprises which have benefited from an economic stimulant fund introduced by the government as youth enterprise development fund (YEDF).The research aimed at giving insight and a model that would help the youth to run more profitable and sustainable businesses in a more competitive way through innovation and creativity and consequently create more employment opportunities as envisaged in vision 2030.This category of enterprises was chosen for the study considering that youths have continually been affected by high levels of unemployment despite the fact that the government has invested a lot of money to stimulate growth in youth led enterprises as a way of solving socio- economic problems.The study investigated on how intangible assets or intellectual capital in dimensions of human capital, structural capital,customer capital,technological capital and entrepreneurial skills determine the level of innovation performance in terms of ability to come up with new products,entering into new markets , coming up with trademarks and patents. Descriptive research design was used in a combination of qualitative and quantitative models, techniques and measures. Multiple regression analysis was used to analyze the qualitative data and descriptive analysis was used to analyze the quantitative data. Seven managers were interviewed while 160 youth entrepreneurs filled the questionnaires and returned. Direct observation was also done which was confirmed by the results from the study. The results showed that innovations demonstrated by the introduction of new products, entry into new markets, trademarks and patents were mainly triggered by technological capital, entrepreneurial skills and structural capital which made the optimal model while other determinants like human xix and customer capital had little influence on innovation performance in these enterprises. Patents and trademarks as indicators of innovation were not at all evidenced in this study though the youths had original ideas specifically those in art and craft but they were not aware of patenting and registration of trademarks due to lack of relevant training. Creation of employment was the key benefit for the youth entrepreneurs since majority and nearly all the respondents were owner- managers for the enterprises thus they were self-employed, however, the rate of employment creation was not matching the rate of youths entering the job market. The processing of loan application and disbursement also discouraged many from joining the groups due to fear of default and consequent loss of their hard earned savings under co-guaranteeing model of security for the group loans. The study recommended more training for the youths periodically as they continue to service the loans advanced to their businesses. This will increase the ability to view the intangible assets as key contributors to the growth and expansion of the enterprises especially because nearly all youths are technologically advanced. Group model used in the disbursement would also be embraced positively as a way of spreading the risk in lending, without necessarily making the youths fear forming groups, if training on group dynamics was included in the training. The patenting agency in the country was also recommended to be a close ally with Youth Enterprise Development Funds in order to create awareness in protecting the original ideas emanating from the youths. Improvement on information management systems in these enterprises emerged as a real need and it was recommended that out sourcing may be good for the small enterprises rather than ignoring the need for proper data handling irrespective of the size of the organization. In a nutshell the government should repackage the youth funds to accommodate more partners in the program who are supportive to the beneficiaries in a more inclusive manner.