Performance of Small and Medium-Sized Enterprises in Uganda: The Role of Innovation
Date
2019-11-04
Authors
Okumu, Ibrahim
Buyinza, Faizal
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research consortium
Abstract
Using the 2013 World Bank Enterprise Survey data for Uganda, this paper employs
the quintile estimation technique to explain the relationship between innovation
and firm performance in small and medium-sized enterprises (SMEs). Innovation
involves the introduction of a new or significantly improved production process,
product, marketing technique or organizational structure. Our results indicate
that individual processing, product, marketing and organizational innovations
have no impact on labour productivity as proxied by sales per worker. However,
the results indicate the presence of complementarity between the four types of
innovation. Specifically, the effect of innovation on sales per worker is positive when an SME engages in all four types of innovation. Even then the complementarity is
weakly positive with incidences of a negative relationship when using any combination
of innovations that are less than the four types of innovation. Policy-wise the results
suggest that efforts to incentivize innovation should be inclusive enough to encourage
all four forms of innovation.