The Impact of Innovation on Firm Competitiveness of Small and Medium Entrepreneurs in Tanzania: A case study of selected SMEs from Small Industries Development Organization
Abstract - This study examines the impact of innovation on the performance of Small and Medium Enterprises (SMEs) in Tanzania. The study was motivated by the notion that innovation by SMEs contributes positively or negatively to the SMES and in turn enhancing their performance. Target population was 6000 SMEs from five regions of Tanzania mainland; namely, Arusha, Dar-es-Salaam, Mbeya, Mwanza, and Singida. The study involved a survey design. Data were analyzed using SPSS, version 23 and adopted both descriptive and hierarchical regression analyses to estimate the impact innovation on firm competitiveness. Multi-stage probability sampling was used in order to overcome problems associated with a geographically dispersed population, that is, SMEs within SIDO. A survey research questionnaire that combines both open ended and closed ended questions was used.The study finds a significant positive effect of capital investment (β= 0.000, p=0.000 < 0.05), product innovation (β= 0.110, p=0.003 < 0.05), process innovation (β= 0.097, p = 0.009 < 0.05), and market innovation (β= 0.085, p=0.023< 0.05) on the competitiveness of the SMEs. However, number of employees indicated a statistically insignificant relationship between number of employees and competitiveness employees (β= 060, p=0.113 > 0.05). The study recommends for SMEs in Tanzania to adopt all kinds of innovations as well as improving the existing innovation exercises/practices.
Keywords - Competitiveness; Innovation; Performance; SIDO; SMEs