A Dissertation Submitted in Partial Fulfillment of the Requirements for Award of Degree of Masters of Science in Entrepreneurship Development (MSC. ED) of
Mzumbe University
The purpose of this study was to investigate the influence of innovation on the growth of small and medium size enterprises (SMEs) in Tanzania majoring the wood and steel furniture manufacturing subsector. We examined i) the influence of product innovation on SMEs growth, ii) the influence of process innovation on the growth of SMEs and lastly we investigated the influence of management of innovation on the growth of SMEs in Dodoma city.
The nature of the research design was quantitative; it involved the testing of hypotheses concerning influence of innovation on the small and mediums enterprises growth. Explicitly, we hypothesised that product innovation; process innovation and management innovation have an influence on the growth of SMEs in Tanzania. Data was collected from 91 wood and steel furniture manufacturing firms which were used as representative of SMEs in Dodoma City.
In this study, descriptive statistics, Analysis of Variances (ANOVA), factor analysis, simple and multiple regression analysis were employed to analyse the data. Findings revealed that innovation has a positive influence on the growth of SMEs. Product innovation confirmed to have however higher influence on the growth of SMEs than process and management innovation. Findings from demographic characteristics showed that entrepreneurs who about 51.6 % of all who owned carpentry workshops had only basic education or had only completed standard seven; this affected management innovation capabilities in the firm. It was also revealed that carpentry is owned by men and married as it majority composing of small enterprises basing on the factor of the number of people they employed for the period of study.
Due to these findings, there are policy implications such as policies that promote the use of recycled wood materials and protection of environment that was previous destroyed by the use of timber in making furniture. Moreover, the theories of innovation and RBV and their applicability in the context of Tanzania are addressed to improve SMEs sector and recommendation where there should be business incubator in which small business will be housed to gloom their ideas in business