Effect of Innovation on MSMEs Performance in Lagos Nigeria
Chapter One
Objective of the study
The objectives of the study are;
- to evaluate the impact of marketing innovation on sales volume of MSMEs in Lagos state
- to determine the impact of process innovation on sales volume of MSMEs in Lagos state
- to examine the impact of product innovation on sales volume of SMEs in Lagos state
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Concept of Innovation
According to Damanpour and Goplakrishnan ( 2001) innovation is the acceptance of any idea or conduct related to a product, service, system, device, policy or program that is new to the adopting organization. Nohria and Gulati (1996) assert that innovation is the inclusion of any policy, program, structure, process or any market or product that a manager perceives to be true. Kuczmarski, Middlebrooks, and Swaddling (2000) view innovation as a new perceived benefit or value to a customer, employee, or shareholder. The new perceived benefit ranges from minimal to massive and may be functional, psychological, emotional, or financial. For example, a process innovation could bring a time-saving benefit to employees. Aliu (2010) assert that innovation is any good service or idea that is perceived by someone as new. Bessant and Tidd (2007) view innovation in the manufacturing sector as the technical, design, manufacturing, management and commercial activities involved in the marketing of a new (or improved) product or the first commercial use of a new (or improved) process or equipment. Kuratko and Hodgetts (2004) assert that innovation is the creation of new wealth or the alteration and enhancement of existing resources to create new wealth. According to Thornhill (2006) innovation is a process of idea creation, a development of an invention and ultimately the introduction of a new product, process or service to the market. Robbins and Coulter (2006) assert that innovation is the process of taking creative ideas and turning them into useful products or work methods. However, innovation is the process of totally undergoing new business activities aside existing practices. Wirtz (2010) indicates that innovation is the development and successful establishment of a technical, organisational, business related, institutional or social solution of a problem, which is perceived as groundbreaking and new, accepted by pertinent users and pursued by innovators in anticipation of an achievement. According to OECD Oslo Manual (2005), four different innovation types are introduced. They are product innovation, process innovation, marketing innovation and organizational innovation. The term product innovation according to Polderet, Polder, Leeuwen, Mohnen and Raymond (2010) is introducing the new products/services or brining significant improvement in the existing products/services. To them, the product must efither be a new product or significantly improved with respect to its features, intended use, software, user-friendly or components and material. According to OECD (2005) Change in design that brings significant change in the intended use or characteristics of the product is also considered as product innovation. The objective of product innovation is to attract new customers (Adner & Levinthal, 2001). Process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software (OECD: Oslo Manual, 2005). According to Polderet, Polder, Leeuwen, Mohnen and Raymond (2010) process innovation is the improvement in production and logistic methods significantly or bringing significant improvements in the supporting activities such as purchasing, accounting, maintenance and computing. A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing (OECD: Oslo Manual, 2005). According to Masood, Sadia, Muhammad, Saman (2013) marketing innovation is the implementation of new marketing method that involve significant changes in the design, placement, packaging, product promotion and pricing strategy. To them, the objective of marketing innovation is to increase the sales, profit in terms of return on investment, return on capital employed, return on asset, return on equity, market share and opening new markets. According to Chen (2006) marketing innovation is changing ways of collecting customer’s information. Polderet, Polder, Leeuwen, Mohnen and Raymond (2010) assert that organizational innovation is the introduction of new practices of doing business, workplace organizing methods, decision making system and new ways of managing external relations and dealing with other arms. Organizational innovation is implementing new ways of organizing business practices, external relations and work place (OECD: Oslo Manual, 2005).
Dimensions of innovation
Innovation dimension shows the ability of firms to engage in and support new ideas and creative processes, thereby departing from archaic practices and technologies. A firm that is looking for new opportunities must arm itself with the four dimensions of innovation. This idea has been supported by Zawawi, Wahab, which, through the multiple dimensions of innovation, explains how the four main dimensions of innovation generate an excellent performance and a competitive advantage for firms. Most researchers agree to break innovation into four main dimensions: process or technology innovation, product or service innovation, organisational innovation, and market innovation. Tidd, Besssant discussed the four dimensions of innovation as “The 4Ps of innovation space” and define it as follows: The first P of 4Ps is Product Innovation. It is a change in the products that the company is proposing. The second P of 4Ps is Process Innovation, that is, a change in the method of manufacture and the way of rendering the service. The third P of the 4Ps, meanwhile, is the innovation of Position. That is the change in the context in which the products or the services have been introducing. Paradigm’s innovation is the fourth P of the 4Ps. It modifies the underlying mental models that frame what the company does. Innovation has a significant impact on business performance, this is what Aksoy in his study on SMEs mentioned, and for him, innovation has a significant impact on the performance of SMEs. These four dimensions of innovation are discussing next:
Chapter Three
Research methodology
Research Design
The research design adopted in this research work is the survey research design which involves the usage of self-designed questionnaire in the collection of data. Under the survey research design, primary data of this study will be collected from MSMEs owners in Lagos state in order to determine the effect of innovation on MSMES performance in Lagos, Nigeria. The design was chosen because it enables the researcher to collect data without manipulation of any variables of interest in the study. The design also provides opportunity for equal chance of participation in the study for respondents.
Population of Study
The population of study is the census of all items or a subject that possess the characteristics or that have the knowledge of the phenomenon that is being studied (Asiaka, 1991). It also means the aggregate people from which the sample is to be drawn.
Population is sometimes referred to as the universe. The population of this research study will be Seventy-five (75) selected MSMEs owners in Ikorodu, Lagos state
Sample Size and Sampling Techniques
The researcher made use of stratified sampling technique because all the members have the same probability of occurrence. The researcher narrowed down the samples to MSMEs owners in Lagos state in order to determine the effect of innovation on MSMES performance in Lagos, Nigeria.
In this study, the researcher used the [TARO YAMANE FORMULA] to determine the sample size.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION
This chapter is about the analysis and presentation of data collected from the field through questionnaire. The analysis of the data with particular question immediately followed by the presentation of findings.
As mentioned in chapter three, 75 questionnaires were administered and 50 were retrieved and necessary analysis was carried out on them and presented as follows:
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain effect of Innovation on MSMEs Performance in Lagos Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Innovation on MSMEs Performance
Summary
This study was on effect of Innovation on MSMEs Performance in Lagos Nigeria. Three objectives were raised which included: to evaluate the impact of marketing innovation on sales volume of MSMEs in Lagos state, to determine the impact of process innovation on sales volume of MSMEs in Lagos state and to examine the impact of product innovation on sales volume of SMEs in Lagos state. The total population for the study is 75 MSMEs owner in Ikorodu, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The study investigated the effect of innovation on MSMEs performance in Lagos, Nigeria. Data generated from the sampled MSMEs were subjected to empirical analysis and the following were observed. The study found that product innovation has a positive strong influence on performance of MSMEs. The study further found that process innovation has a positive moderate influence on MSMEs. The study also indicates that market innovation has a positive strong influence on MSMEs. Based on the foregoing, the study concludes that innovation influence on MSMEs in Lagos state.
Recommendation
The study recommends that government should encourage innovative MSMEs development through the provision of incentives to MSMEs and standing as a guarantor for loans given to aspiring entrepreneurs and innovators. Government should also provide an enabling environment like steady power supply access roads, grants credits facilities to MSMEs and innovators. The unemployed should venture into innovation to help reduce the incidence of unemployment that affects the economy negatively. Entrepreneur need to be innovative especially in the area of product development, business process and marketing in order to remain competitive in their business environment.
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