A PROPOSAL EFFECT OF INNOVATION ON MSMES PERFORMANCE IN LAGOS NIGERIA

Abstract

The study will investigate the effect of innovation on MSMEs performance in Lagos state, Nigeria. The following objectives will be used for the study: following objectives will be ascertained; 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 method of data analysis that will be used by the researcher is the simple percentage. More so, percentage and degrees of the responses will also be used in the analysis. Here, the ratio of those whose responses were not in the affirmative will be found and conclusions will be drawn there upon.  Representations of the level of responses will be made in tabular form. The Statistical Package for Social Sciences (SPSS) software will be used to test the hypotheses

Chapter one

Introduction

1.1Background of the study

The fact that Micro, Small and Medium Enterprises (MSMEs) constitute around 99.7 percent of the enterprises globally (Martin and Namusonge, 2014) proves their significance in contributing to the economic and industrial development in most countries. It is, therefore, necessary to put in place a policy mechanism that will assist their growth. In order to remain competitive, grow faster and function effectively and efficiently, Small and Medium Enterprises (MSMEs)  need to utilize knowledge and technology efficiently. Employing advanced process technology, for example, generally leads to a better product quality and durability. Moreover, adopting a new technology results reduced costs by saving materials, energy or through replacement of conventional materials with cheaper alternative materials. MSMEs  play a major role in both developed and developing countries, encompassing more than 90 percent of business operations in Africa, and also contributing over 50 percent of GDP and employment of their economies (Martin & Namusonge, 2014)

Innovation (in business) means novelty, new things being done, or old things being done in new ways to increase the performance in terms of sales, profitability and market shares in an organization. It is an application of technological, institutional, human resources and discoveries of productive processes, resulting in new practices, products, markets, institutions and organizations that need organizational improvement or performance in terms of sales, profitability and market shares. MSMEs can be a product, process or marketing innovation adopted in order to increase performance of enterprises in terms of sales volume or otherwise. Small and Medium Enterprises (MSMEs)  are considered as the machine of economic growth that drives and promotes equitable development of nations, which is achieved by adopting innovation principles. The role of Small and Medium Enterprises (MSMEs)  in the economic and social development of countries is well established when the concept of innovation is applied on the Small and Medium Enterprises (MSMEs), and as a result, performance will be improving substantially. The sector is a nursery of entrepreneurship, often motivated by innovation (Twaliwi & Isaac, 2017).

Small and Medium Enterprises (MSMEs)  in Lagos state have not frequently applied the concept of innovation in their businesses. There are less new products in the market, less adoption of marketing innovation strategies and poor business innovation processes. As a result, these enterprises may not likely experience growing sales volume which in turn means poor performance. The market is full of old and previously existing products which the consumers already have knowledge about their quality. However, although Small and Medium Enterprises (MSMEs) in Lagos do not adopt innovation (product, process, marketing or organizational) fully and frequently, this does not mean there is a complete absence of innovation. Though in different degrees, all these innovations are present in these Small and Medium Enterprises (MSMEs), and hence, their performance effect needs to be examined.

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