The Impact of Innovation on SMEs Performance: a Case Study of Lapo Microfinance Bank, Mushin Lagos
CHAPTER ONE
Objective of the Study
Main Objective
The main objective of this study was to investigate the impacts of innovations on performance of Lapo Microfinance Bank, Mushin Lagos, Lagos state.
Specific Objectives
- To establish the role technological innovation in Lapo Microfinance Bank, Mushin Lagos.
- To assess the impacts of product innovation in Lapo Microfinance Bank, Mushin Lagos.
- To analyze the effects of new market innovation in Lapo Microfinance Bank, Mushin Lagos.
- To investigate the effects of process innovation in Lapo Microfinance Bank, Mushin Lagos.
CHAPTER TWO
LITERATURE REVIEW
Introduction
This chapter summarizes the information from other researchers who have carried out their research in the same field of study. It provides a theoretical and empirical review of the study. It also provides a review of the local research and the chapter‟s summary.
Theoretical Literature Review
This study is reinforced by three theories of innovations. The theories include disruptive innovation theory, innovator’s dilemma theory and innovator’s solution theory.
Disruptive Innovation Theory
Disruptive innovation theory was hypothesized by Christensen in 2017. He suggested that in a quickly changing and uncertain world, innovation is the key to competitive advantage. Yet innovation also increases uncertainty and market pressure (Lettice, 2021). The more radical the innovation, the more difficult it is to estimate its market acceptance and potential. The increasing complexity and market dynamics create a substantial knowledge gap between theory and practice. Many companies are not organized to give new ideas a chance, to recognize trend breaking points in the market, to adapt quickly to changing market circumstances, or to cause market changes in the first place (Markides, 2009).
Disruptive innovations change the game. They attack an existing business, and offer great opportunities for new profit growth. Only radical innovations lead to growth (Hamel, 2009). Lettice and Thomond (2021) define disruptive innovation as: A successfully exploited product, service or business model that significantly transforms the demand and needs of an existing market and disrupts its former key players. A radical innovation is a product, process or service with either unprecedented performance features or familiar features that offer significant improvements in performance or cost that transform existing markets or create new ones.
Breakthrough innovations are based on inventions that serve as a source of many subsequent inventions (Ahuja, 2010). Ambiguous, extremely turbulent and uncertain times, combined with a long development time, make breakthrough innovations a highly risky matter. Disruptive innovation frequently results from a combination of the emergent qualities of several smaller ideas based on observing the world differently, challenging presuppositions, expanding boundaries, spotting the “white space”, discovering the as yet unrealized needs of customers, setting challenging targets, thinking the unthinkable and challenging our underlying mental models (Coulson, 2011).
Innovation patterns appear as fractals, with small decision cycles imbedded in larger decision cycles (Leonard, 2023), in which the basic development steps identify; develop; plan; implement are the guiding principle. Within this basic outline, the process of disruptive innovation is a rhythm of searching and selecting, exploring and experimenting, of learning and unlearning, and cycles of divergent and convergent thinking. It is a complex and interactive process of probing and learning or feedback. Contrary to linear, incremental innovation processes, such as the stage-gate concepts (Cooper, 2023), disruptive innovation is more like a spiral or circular development process of continuous fast feed-forward and feed-back loops.
This disruptive innovation development process is an interdependent system, based on the concepts of system thinking and of dynamic strategic thinking with learning as a central aspect (Brown, 2009). This process is affected by exogenous determinants such as economic, social and political factors, competition and infrastructure, and endogenous determinants such as resources, corporate structure and corporate culture.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Introduction
This chapter discusses the research design and methodology of the study; it highlights a full description of the research design, the research variables and provides a broad view of the description and selection of the population. The research instruments, data collection techniques and data analysis procedure have also been presented.
Research Design
The research design according to Mugenda and Mugenda (2018) provides answers for questions such as; what techniques were used to gather data, what kind of sampling strategies and tools were used and how were time and cost constraints dealt with. In other words, it is an arrangement of conditions for collection and analysis of data in a way that combines their relationship with the purpose of the research. It is a means to achieve the research objectives through empirical evidence that is required economically.
Descriptive studies portray the variables by answering who, what, and how questions. According to Mugenda and Mugenda (2018), descriptive design is a process of collecting data in order to test hypothesis or to answer the questions of the current status of the subject under study. For the purpose of this study descriptive survey research design was used. This design enabled the researcher to establish the impacts of innovations in Lapo Microfinance Bank, Mushin Lagos, Lagos state.
CHAPTER FOUR
DATA ANALYSIS, INTERPRETATIONS AND PRESENTATION
Introduction
This chapter analyses, interprets and presents the study findings as per the aim of this study, which was to investigate the impacts of innovations on performance of Lapo Microfinance Bank, Mushin Lagos, Lagos state. Also the study sought to establish the role technological innovation, assess the impacts of product innovation, to analyze the effects of new market innovation and to investigate the effects of process innovation in Lapo Microfinance Bank, Mushin Lagos.
Response Rate
The researcher gave out 100 questionnaires and received back 72 of the questionnaires as was the sample size of the study research. Mugenda (2018) states that a 50% response rate is adequate, 60% is good and above 70% is rated very well. The response was therefore rated very well. The commendable response rate was achievable after the researcher administered the questionnaires personally and made personal visits and phone calls to remind the respondents to fill-in and return the questionnaires. In the descriptive statistics, relative frequencies, pie charts and graphs were used in some questions and other were analyzed using mean scores with the help of Likert scale ratings in the analysis. A straight line predictor regression model was also developed.
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter presents a summary of the findings, conclusions and recommendations for practice and further research on the problem. The main objective of this study was to investigate the impacts of innovations on performance of Lapo Microfinance Bank, Mushin Lagos, Lagos state. Also the study sought to establish the role technological innovation, assess the impacts of product innovation, and analyzes the effects of new market innovation and to investigate the effects of process innovation in Lapo Microfinance Bank, Mushin Lagos.
Summary of the Key Findings
Technological Innovation
The study revealed that that majority of the respondents indicated that current technologies were improved. Also the study revealed that there was renewing the technologies used to facilitate coordination between different functions such as marketing and manufacturing as represented by a mean of 4.43. Further the study revealed that there was the renewing the supply chain management system and also renewing the human resources management system. In addition the study revealed that current technologies were improved when renewing the production and quality management systems.
Further the study revealed that current technologies were improved while renewing the routines, procedures and processes employed to execute firm activities in innovative manner. The study research further indicated that technological innovations were imitated from international markets and the study revealed that there is renewing the organization structure to facilitate teamwork. Also there was renewing in-firm management information system and information sharing technologies.
Product Innovation
From the findings the study revealed that current products were being improved. Also the study established that there was the developing of new products with components and materials totally differing from the current ones as represented by a mean of 4.3. Further the study also established that as results of current products were being improved there was decreasing manufacturing cost in components and materials of current products. Further the study revealed that the current products being improved there was developing of new products with technical specifications and functionalities totally differing from the current ones.
In addition the study further found out that there is Increasing manufacturing quality in components and materials of current products because of the current products being improved. Also there was developing newness for current products leading to improved ease of use for customers and to improved customer satisfaction as a result of current products being improved.
Marketing Innovation
With regard to marketing innovation the study revealed that current marketing practices have been improved. Also the study revealed that there had been renewing the product promotion techniques employed for the promotion of the current and/or new products s represented by a mean of 4.2. Also there was the renewing the distribution channels without changing the logistics processes related to the delivery of the product. Further the study established that there had been renewing the general marketing management activities.
Further the study established that there had been renewing the design of the current and/or new products through changes such as in appearance, packaging, shape and volume without changing their basic technical and functional features. Also the study unveiled that marketing innovation was imitated from international markets also there had been the renewing of the product pricing techniques employed for the pricing of current and/or new products.
Process Innovation
From the study findings it was revealed that current products were improved in process innovations. Also the study revealed that there was decreasing variable cost components in manufacturing processes, techniques, machinery and software as represented by a mean of 4.5. Also the study unveiled that there was decreasing variable cost and/or increasing delivery speed in delivery related logistic processes. Also the study found out that there was determining and eliminating non-value adding activities in delivery related processes.
In addition the study established that there was determining and eliminating non-value adding activities in delivery related processes. Further the study revealed that there was increasing output quality in manufacturing processes, techniques, machinery and software. On performance the study revealed that general profitability of the firm and return, return on assets and innovations would be successful upon the application of process innovation.
Conclusion
The study concludes that on the role technological innovation on SMEs the technological innovation ensures that there is the renewing of the routines, procedures and processes employed to execute firm activities in innovative manner thus facilitating teamwork in an organization.
Regarding product innovation the study concludes that developing newness for current products leads to improved ease of use for customers and to improved customer satisfaction and also decreases manufacturing cost in components and materials of current products.
The study concludes that on marketing innovation the design of current and/or new products can be renewed. This can be done through changes such as in appearance, packaging, shape and volume without changing their basic technical and functional features.
The study concludes that through process innovation there is the determining and eliminating non-value adding activities in delivery related processes and also aids in decreasing variable cost components in manufacturing processes, techniques, machinery and software.
Recommendations
The study recommends that management of the SMEs should adopt new or beneficial technological innovation. This is because better technological innovation used to facilitate coordination between different functions such as marketing and manufacturing thus better firm performance.
Regarding product innovation on SMEs performance the study recommends that SMEs management should consider developing new products with technical specifications and functionalities totally differing from the current ones this is because newness for current products leads to improved ease of use for customers and to improved customer satisfaction.
The study recommends that the SMEs marketing departments should consider renewing the product promotion techniques employed for the promotion of the current and/or new products if the technique if unfavouring the services or products offered by the SMEs and also to avoid too much cost on product promotion.
The study recommends that the management of the SMEs should adopt undertaking process innovation as through process innovation there is increased output quality in manufacturing processes, techniques, machinery and software. Also through process innovation there is determining and eliminating non value adding activities in delivery related processes.
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