Factors influencing micro and small enterprise’s decision to innovate in Kenya
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Date
2018-12-08
Authors
Njiraini, Peter
Gachanja, Paul
Omolo, Jacob
Journal Title
Journal ISSN
Volume Title
Publisher
Springer Nature
Abstract
An enterprise’s propensity to innovate has been recognised to have an important
bearing on its performance. In Kenya empirical work on micro and small enterprises
(MSEs) propensity to innovate is still nascent in spite of the pivotal role played by
these enterprises in the economy. The current paper used a Probit econometric
model to analyse factors that influence MSE’s decision to innovate or not. Results
from the analysis show that the average number of years of education for a
production worker, physical capital intensity, age of an MSE, access to finance and
size of an MSE are important factors influencing MSEs innovation decisions. Higher
foreign ownership and manager’s experience were found to act as hindrances
towards MSEs’ decision to innovate. Based on the study findings it is clear that
human capital skills and an MSE’s resource endowment positively influences MSEs
innovativeness. From a theoretical perspective, there is need for skills segmentation to
isolate human capital skills that are most relevant for stimulating MSEs innovative
activities. Firm level and policy level strategies are also needed to improve the
technical skills of the average MSEs’ production workers across the country.
Subsidisation of physical capital and financial services for MSEs should also be used
to promote these enterprises innovativeness.
Description
Research Article
Keywords
Micro and small Enterprise, Innovation, Propensity
Citation
Journal of global entrepreneurship research 2018, https://doi.org/10.1186/s40497-018-0132-4