Influence of Innovation on the Financial Performance of Small and Medium Women-Owned Enterprises in Nairobi City County

Abstract

Women-owned SMEs have important contributions to make to innovation and development economies globally. In Kenya Women owned small and medium enterprises report earnings only 57% of income that male enterprise owners earn. Statists show that women owned SMEs which make 30% of registered SMEs record high failure rate which can be linked to among other factors, their level of innovation. Whereas previous research has been on types of innovation there is a dearth of empirical studies focusing on women-owned SMEs and innovation. Therefore, the objective of this study was to assess the innovations influence of innovation on financial performance of women-owned SMEs. The specific objectives were to determine the influence of technological innovation, to establish the influence of marketing innovation, to assess the influence of organization innovation, to identify the influence of strategic innovation and the moderating effect of environmental factors on the performance of small and medium women-owned enterprises in Kenya. The scope of this study was in Nairobi County and the study further focused on women-owned enterprises in SMEs. The study was guided by an epistemological research philosophy adopting a positivist research paradigm. The research design was cross-sectional survey design using both quantitative and qualitative approaches. The target population for this study was 5,362 registered women owned enterprises registered with the Nairobi City County by December 2017 and the sample size was 358 respondents derived using Fisher’s formulae. This study used a self-administered, closed, and open-ended questionnaire to obtain quantitative data. The used descriptive statistics such as mean, standard deviation, median and proportions using the Statistical Package for Social Sciences (SPSS) version 24 and Microsoft Excel. Regression analysis and correlation analysis were used to determine the direction and strength of the relationship between the independent and the dependent variables. The study results revealed that whereas technological innovation, marketing innovation, organizational innovations and strategic innovations had a positive and significant influence on performance of women owned enterprises in Kenya, organizational innovation had the highest positive influence. Environmental factors were also found to have a significant moderating effect on relationship between innovations and performance of women owned SMEs. Study concluded that in this ever-changing entrepreneurial environment, adoption of various innovations by SMEs is a key component of enhancing their performance. Therefore, enterprise owners need to be proactive in adopting different innovations since they all are linked positively to the performance of enterprises.