Small and medium enterprise innovations: determinants in the agri-food value chain in central and eastern Uganda
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Date
2025-02
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Kenyatta University
Abstract
The Small and Medium Enterprises (SMEs) play a significant role in agri-food value chain, through adding value to primary agricultural produce and acting as a linkage between the consumers and producers. However, for the SMEs to remain continuously relevant and competitive in the agrifood value chain, they need to innovate. There is limited studies on determinants to SME innovation in the agri-food value chain for developing economies. Most of the available studies on factors driving SME innovation are either focused to a developed country context, or in a non-agricultural based context. This study was set up to bridge this gap, specifically, the study was set up to: (1) assess the level of agri-food SME innovation in central and eastern Uganda, (2) analyze the factors that influence the level of agri-food SME innovation in central and eastern Uganda, (3) assess the association among SME market orientation, attitude towards innovation, and firm innovativeness, and (4) determine the influence of agri-food SME entrepreneurial orientation on learning, cost focus and innovation. The study collected cross-sectional primary data from a sample of 521 agri-food SMEs selected from the districts of Kampala, Mukono, Wakiso and Jinja. These districts collectively have the highest concentration of agri-food SMEs. Collected primary data was analyzed in SPSS using descriptive statistics, exploratory factor analysis, hierarchical regression analysis and the multivariate structural equation modelling using AMOS v. 23. Results for the first objective showed that the levels of SME innovations were generally high, at about 80%. Customer focused innovation would be increased by presence of policies that support innovation and reward of creative employees. On the other hand, system focused innovation would be increased by having policies and principles that support innovation and undertaking of internal product and process improvement research. However, systems focused innovation didn’t show increase due to reward to creative employees. Results for the third objective showed that interfunctional coordination influences both firm innovativeness and innovation attitude. On the other hand, competitor orientation does not influence innovation attitude, but negatively influences firm innovativeness, while, customer orientation does not influence firm innovativeness, but positively influences innovation attitude. Results also confirmed the positive influence of innovation attitude on firm innovativeness. Results of the fourth objective suggested the importance of proactiveness in enhancing learning orientation, cost focus and innovation. On the other hand, entrepreneurial proclivity was seen to have significant influence on learning orientation and cost focus but not on innovation. The study findings have three broad practical implications. First, encouraging agri-food SMEs to develop policies that support innovation would improve the overall level of innovation, while, building the capacity of agri-food SMEs to conduct product and process improvement research would increase the level of systems focused innovation. Secondly, focusing on improving internal coordination among departments enhances both attitude and firm’s ability to undertake innovation. Lastly, helping SMEs to become proactive or have high levels of proclivity would also increase their cost focus and learning orientation which are all important to the sustainability of agri-food SMEs. Theoretically, this study extends the literature on innovation to agri-food SMEs, a sector that is increasing becoming important for growth and development of most African countries, including Uganda. Studies on agri-food SME innovation have been generally lacking. By assessing the drivers of SMEs innovation in agri-food sector of a developing country, this study becomes theoretically relevant
Description
A thesis submitted in fulfilment of the requirements for the award of the degree of Doctor of Philosophy in Agribusiness Management in the School of Agriculture and Environmental Sciences of Kenyatta University, February 2025
Supervisors:
Dr. Ibrahim Macharia
Dr. Lucy Wangare Ngare