Innovation practices and growth of small and medium enterprises in greater Kampala metropolitan area, Uganda
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Date
2021-09
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Publisher
Kampala International University, College of Economics and management
Abstract
Small and medium enterprises are still facing limited growth and low survival rate due to serious obstacles in developing world. In Uganda, Small and medium enterprises still perform poorly, most SMEs don’t live to see their first, second and third birthdays and those that live to see them still face growth challenges, yet they perform a significant role in the economy as they employ majority of the population of the non-farming active population. Innovation is one of the practices underpinning economic growth and survival of small and medium enterprises in the business environment by providing great potential to survive and prosper. The purpose of this study was to establish the effect of innovation practices on the Growth of Small and Medium Enterprises in Greater Kampala Metropolitan Area. This was achieved by three specific objective; To establish the effect of research and development on the growth of Small and Medium Enterprises in Greater Kampala Metropolitan area, To determine the effect of new product development on the growth of small and medium enterprises in Greater Kampala Metropolitan area and To ascertain the impact of information technology adoption on the growth of small and medium enterprises in Greater Kampala Metropolitan area. This study adopted mixed methods approaches where quantitative and qualitative approaches guided by descriptive, correlational, survey and cross-sectional research designs. A sample of 226 (owner, manager and any other top administration staff) was selected from the population of 571 firms. Structured and unstructured questionnaires were used to collect data from the respondents with the guide of research assistants. Data collected was cleaned prior to analysis. Several diagnostic tests were done to ensure that the data was ready for parametric tests including checking for omitted values, checking outliers, common method variance, testing for normality, linearity, sampling adequacy and Multicollinearity. Pearson linear correlation and simple linear regression analysis was conducted on each of the variables to establish the relationship between variables and the effect of independent variables on the dependent variable respectively. Multiple linear regression was done to determine the predictive nature of the relationships between the study variables and relative effects of research and development, new product development and information technology adoption on the growth of SMEs. Findings from Pearson linear coefficient correlation revealed that all the three independent variables (research and development, new product development and information technology adoption) were significantly correlated with sig. values < 0.05. Simple linear regression results revealed that each 18.7%, 31.9% and 42.2% of growth of SMEs was explained by research and development, new product development and information technology adoption respectively. Multiple linear regression revealed that 46.8% of growth of SMEs in GKMA was explained by innovation practices R Square = .468. Out the three constructs of innovation practices that were regressed with growth of SMEs, information technology adoption was the highest predictor beta = .492 and p (.000) <0.05; it was followed by new product development with beta = .277, p (.000) <0.05 and research and development was found not statistically significant (sig. = .803>0.05) in a model where there are these variables. In this study, it was revealed that innovation practices account for 46.8% of the growth of small and medium enterprises in greater Kampala metropolitan area. Thus, this study concluded that innovation practices affect the growth of small and medium enterprises in GKMA. This study recommends that all stakeholders to support SMEs the adoption and implementation of the innovation practices in SMEs to facilitate growth in terms of profitability, sales and products. Predominantly as per this study’s findings, businesses should start by embracing information technology adoption practices since it was ranked by this study as the number one predictor of growth of small and medium enterprises.
Description
A thesis submitted to college of economics and management in partial fulfillment of the requirements for the award of doctor of philosophy in business management finance and accounting
Keywords
Innovation practices, Growth, Small and medium enterprises, Uganda