IMPACT OF INNOVATION ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES. (A CASE STUDY OF IBAFO OGUN STATE)

Abstract

One of the critical challenges facing Small and Medium Scale Enterprises in Nigeria businesses is innovation. The approach or attitude of many business owners of Small and Medium Scale Enterprises towards innovation is lukewarm and this is seriously affecting the degree of their business expansion and profit generation capacity. Innovation has not been adequately and creatively used. This study showed the impact and significance that innovation has on Small and Medium Scale Enterprises through product, process and marketing innovation. The study adopted Diffusion theory of innovation which explained when, where and how idea or product can be diffused or spread. The research design used by the study was questionnaire where questions were structured and made simple for all respondents. In this research work, multi stage sampling technique was used in order to get sample size that would be true representative of the total population, the sample size 226 was derived from the formula Yaro yameni and of which the population is 520. 226 questionnaires were administered of which only one wasn’t returned. However, the area of Study used is Ibafo Ogun State, this is because little or no form of innovation is being applied in the area. The data were analysed and of which 87 males and 138 females responded. The result of the first objective, product/service, 54.7% respondents disagreed that innovation product and services added to their sales volume. More so, 34.7% of the respondents did not agree with the view that there was improvement of old products and the need to raise quality of new ones. In respect of the second objective, process innovation, majority of the respondents 37.3% respondents that new machinery, technology, process, methods were being used in the companies often. Moreover, 44.0% of the respondents did not agree with the view that their firms conducted internal training for employees upon introduction of new products. Likewise in the third objective, marketing innovation, majority of the respondents 69.3% agreed that their companies was better than competitors in terms of entering new markets, new pricing methods, new distribution methods etc. Also, 45.3% of the respondents agreed as well that they advertised their products to create much awareness. However, the first hypothesis measured the rate of product innovation and revealed that there was positive relationship between product innovation and sales volume. Also, the second hypothesis measured the rate of process innovation and revealed that there was a negative relationship between process innovation and quality, delivery of goods and services. Moreover, the third hypothesis measured the rate of marketing and discovered that there was a positive relationship between marketing innovation and product design, distribution of goods and services. From the research findings, it was recommended that Government through appropriate legislations and policies should encourage SMEs to flourish in Nigeria by creating business climate favourable for their survival. Robust subventions must also be given to the diligent and hardworking SMEs owners in order to establish their base financially with sound working capital, products of the best quality can be produced and sold. Besides, the quality and delivery of goods and services will be attractive. Likewise, the product qualities will be of the best standard that can withstand foreign products.