Dimensions of innovation and their effects on the performance of small and medium enterprises: the moderating role of firm’s age and size

Abstract

The study examined the effect of each of the dimensions of innovation on the performance of small and medium enterprises (SMEs) in Harare, Zimbabwe. It also examined the moderating effect of a firm’s age and size on the innovation-performance relationship of SMEs. A cross-section of 330 SMEs was taken from Harare using a structured questionnaire which was randomly distributed to the respondents. Structural equation modeling and moderated regression analyses were performed to test the research hypotheses. Results show that, aggregately innovation does not significantly influence both financial and non-financial performance of a firm. Out of the four dimensions of innovation, only marketing innovation significantly influences the firm’s financial and non-financial performance. Results also show that the effect of marketing innovation on the firm’s financial performance is stronger in younger than older firms. Similarly, results reveal that the effect of marketing innovation on the firm’s financial performance is stronger in bigger than smaller firms. Therefore, younger and bigger firms are advised to take advantage of innovation as a tool to improve their performance. On the contrary, older and smaller firms are advised to be cautious when attempting to boost their performance through innovation.

Résumé

Cette étude a examiné l’effet de chacune des dimensions de l’innovation sur la performance des petites et moyennes entreprises (PME) à Harare, au Zimbabwe. Elle a également examiné l’effet modérateur de l’âge et de la taille d’une entreprise sur le rapport innovation-performance d’une entreprise. Un échantillon représentatif de 330 PME a été sélectionné à Harare à l’aide d’un questionnaire structuré, distribué au hasard aux répondants. Une modélisation par équations structurelles et des analyses de régression modérée ont été effectuées pour tester les hypothèses de recherche. Les résultats montrent que, globalement, l’innovation n’influence pas de manière significative les performances financières et non financières d’une entreprise. Parmi les quatre dimensions de l’innovation, seule l’innovation en matière de marketing influence de manière significative les performances financières et non financières des entreprises. Les résultats montrent également que l’effet de l’innovation en marketing sur la performance financière de l’entreprise est plus marqué dans les entreprises les plus jeunes que dans les entreprises les plus anciennes. Il est donc conseillé aux entreprises les plus jeunes et les plus importantes de tirer profit de l’innovation en tant qu’outil d’amélioration de leurs performances. À l’inverse, il est conseillé aux entreprises plus anciennes et plus petites d’être prudentes lorsqu’elles tentent d’améliorer leurs performances par l’innovation.

Keywords:

• Innovation
• firm age
• firm size
• firm performance
• small and medium enterprises
• Zimbabwe

Mots-clés:

• Innovation
• âge d’une entreprise
• taille d’une entreprise
• performance d’une entreprise
• petites et moyennes entreprises
• Zimbabwe

Acknowledgement

Many thanks go the reviewers for their guidance and the Editor-in-Chief for considering this paper.

Disclosure statement

Authors acknowledge that they have no financial interest or benefit that has arisen from the direct applications of this research.

Additional information

Funding

We would like to thank Chinhoyi University of Technology for availing funds to undertake this study.

Notes on contributors

Blessing Kudzai Mabenge

Blessing Kudzai Mabenge is a Master of Philosophy Graduate in the Department of Entrepreneurship and Business Management at Chinhoyi University of Technology. His research areas of interest are innovation, and small and medium enterprises.

Grace Portia Kuda Ngorora-Madzimure

Grace Portia Kuda Ngorora-Madzimure is a Senior Lecturer in the Department of Entrepreneurship and Business Management at Chinhoyi University of Technology. She researches on entrepreneurship and business management.

Charles Makanyeza

Charles Makanyeza is a Professor and Director of the Graduate Business School at Chinhoyi University of Technology. His research areas of interest include marketing, strategy, entrepreneurship, consumer behavior and agribusiness.