Innovation and Micro and Small Enterprises Growth Performance: Evidence from Kenya

Abstract

The role that innovation can play towards the growth and survival of an enterprise continues to gain credence as better indicators of enterprise innovativeness come to the fore. In spite of this growing body of knowledge, micro and small enterprises in Kenya continue to experience high mortality rate. This paper used World Bank Enterprise Survey data for Kenya to probe whether innovative micro and small enterprises are indeed associated with better growth performance. The study used a qualitative analysis using a descriptive analysis and t-test for mean differences to compare innovative and non-innovative micro and small enterprises. The results show that there was no statistically significant relationship between a micro and small enterprise’s growth performance and its innovativeness. Innovative micro and small enterprises were, however, found to have invested relatively higher resources towards innovation inputs and hiring of advanced human skills. They also participated in export trade. The results seems to suggest that innovative micro and small enterprises’ investment were either too marginal to make a difference or the investments dissipated along the innovation chain.