The Relationship between Innovativeness and Performance of Smes in Nairobi County, Kenya

Abstract

SMEs fuel Kenya's economic growth and development and boost Kenya's GDP by creating employment, However, they face several challenges that might impede their growth and longevity. These include limited financial resources, fierce market rivalry, and inadequate management skills These problems reduce profits and competitive advantage for many SMEs. These enterprises are driven by survival or necessity Previous study shows that 60% of Kenyan small enterprises fail during the first six months (RoK, 2020) and more than 60% fail annually (Ngugi, 2020). Consequently, SMEs have embraced various SME innovativeness for instance digital marketing to improve performance of their businesses. The general objective was to examine the relationship between innovativeness and the Performance of SMEs in Nairobi County. Therefore, the specific objectives that guided the study was to examine the relationship between innovativeness and the Performance of SMEs in Nairobi County. Chi-square analysis was done to find out the relationship between innovativeness and SME performance. Binary logistic regression analysis was done to gain greater insights on the relationship between the variables. According to the results, there is a strong statistical relationship between innovativeness and SME performance in Nairobi. This led to the rejection of null hypothesis. It was recommended that SME managers and owners use SWOT analysis to develop effective strategies for SME innovativeness. From the research findings and conclusion, the researcher recommends Small and Medium Enterprises to embrace the innovativeness so as to strengthen business performance. Further studies can also be conducted in other locations and incorporate other independent variables.