Entrepreneurial Innovation and Competitiveness of Food and Beverage Manufacturing Firms in Nairobi City County, In Kenya

Abstract

Kenya’s food and beverage manufacturing subsector, largely composed of SMEs that employ millions and contribute significantly to GDP, continues to show slow growth, high early-stage failure rates, and uneven competitive performance. The main issue driving this study is a context-specific evidence gap: despite widespread focus on “innovation,” managers and policymakers lack clear guidance on which types of innovation most improve competitiveness in this subsector and whether firm size influences these effects. Guided by a positivist research philosophy and grounded in the Schumpeterian Theory of Innovation and Entrepreneurship, the Theory of the Innovative Firm, the Resource-Based View, and Dynamic Capabilities Theory, the study aimed to achieve one broad goal, to determine how entrepreneurial innovation affects the competitiveness of food and beverage manufacturing firms in Nairobi City County, Kenya, and four specific objectives: to evaluate the impacts of product development, process, marketing, and organizational innovations, and to see if firm size moderates the relationship between entrepreneurial innovation and competitiveness. Using a convergent mixed-methods approach, the study covered all 201 licensed food and beverage manufacturers in Nairobi City County (2022), with owner/managers as respondents selected through stratified random sampling. Data collection involved structured questionnaires. Quantitative data were analyzed using SPSS, including descriptive statistics, regression models, and comprehensive diagnostic tests (normality, multicollinearity, and homoscedasticity). Qualitative responses were thematically coded and integrated to strengthen inferences. Results indicate that innovation has a significant impact on competitiveness. Entrepreneurial innovation has the strongest effect (β = 0.925, p < 0.001), followed by process (β = 0.793, p < 0.001), marketing (β = 0.732, p < 0.001), product development (β = 0.666, p < 0.001), and organizational innovation (β = 0.591, p < 0.001). Larger firms have a small but significant advantage in adoption (p = 0.011), and firm size substantially influences the entrepreneurial innovation–competitiveness link (p < 0.001). The study contributes to theory by empirically linking firm-level innovation streams to competitiveness in an emerging-market manufacturing context and by demonstrating a size-dependent return to entrepreneurial innovation. Practically, it recommends focusing on entrepreneurial, process, and marketing innovations, while improving product development and organizational practices, and using scale to embed and normalize innovative routines—ultimately developing dynamic capabilities for sustained competitive advantage.