EFFECT OF INNOVATION ON MSMES PERFORMANCE IN LAGOS NIGERIA

Abstract

This study was on effect of Innovation on MSMEs Performance in Lagos Nigeria. MSMEs adopt innovations in order to protect themselves from escalating competition, need to reduce cost and satisfy consumer needs. Thus MSMEs adopt innovations in order to improve their overall performance and sustainable competitiveness. 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

 

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.

Statement of the problem

As innovation enhances the overall performance and competitiveness of the business, its effect can be probed from different angles. One of them is to evaluate the sales volume of the enterprise. Increased sales volume means increased business activities and revenue, and thus, it can be a clear measure of business performance.  Lagos MSMEs in Nigeria have not frequently applied the concept of innovation in their businesses. There is less new product in the market, less adoption of marketing innovation strategies, poor business innovation processes which negatively reduce the sales volume of MSMEs in Lagos state. The market is full with existing products which the consumers already have pre-knowledge about the quality, quantity and taste. However, MSMEs are yet to fully apply product innovation, process innovation and marketing innovation and organizational innovation in order to increase its sales volume in the sector.

Objective of the study

The objectives of the study are;

1. to evaluate the impact of marketing innovation on sales volume of MSMEs in Lagos state
2. to determine the impact of process innovation on sales volume of MSMEs in Lagos state
3. to examine the impact of product innovation on sales volume of SMEs in Lagos state

 

Research question

The study formulated the following research questions;

1. what is the impact of marketing innovation on sales volume of MSMEs in Lagos state?
2. what is the impact of process innovation on sales volume of MSMEs in Lagos state?
3. what is the impact of product innovation on sales volume of SMEs in Lagos state?

Research hypotheses

The study formulated the following research hypotheses s

H0: there is no impact of marketing innovation on sales volume of MSMEs in Lagos state

H1: there is impact of marketing innovation on sales volume of MSMEs in Lagos state

H0: there is no impact of process innovation on sales volume of MSMEs in Lagos state

H2: there is impact of process innovation on sales volume of MSMEs in Lagos state

H0: there is no impact of product innovation on sales volume of SMEs in Lagos state

H3: there is impact of product innovation on sales volume of SMEs in Lagos state

 

Significance of the study

The study will be beneficial to students, lecturers and the MSME owners. The study will give a clear insight on the effect of innovation on MSMEs performance in Lagos state, Nigeria. The result of this study will help MSMEs on how to management their firm in a proper way without lost with the idea of innovation. The study will also serve as a references to other researcher that will embark on the related topic

Scope and limitation of the study

The scope of the study covers effect of innovation on MSMEs performance in Lagos, Nigeria.

The researcher encounters some constraints which limit the scope of the study namely:

The research material available to the researcher is insufficient, thereby limiting the study

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Definition of term

Innovation: Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services

MSMEs: Micro, small and medium enterprises (MSMEs) play a big role in the Nigerian economy and economies around the globe. MSMEs outnumber large companies by a wide margin and also employ many more people. SMEs are important for economic and social reasons, given the sector’s role in employment.

Performance: A performance is an act of staging or presenting a play, concert, or other form of entertainment. It is also defined as the action or process of carrying out or accomplishing an action, task, or function

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