An assessment of the impact of innovation & business networks on the performance of SMEs in the Harare metropolitan

Abstract

The contribution of Small and Medium Enterprises (SMEs) has been globally emphasized especially in regions like Asia and Europe. Innovation and business networks have been cited as the major drivers behind this growth. However, Zimbabwe still has high SME failure rate and little is known about the impact of innovation and business networks on their performance. Given the identified research gap, the purpose of this study was primarily to assess the impact of innovation and business networks on the performance of SMEs in Harare so as to alleviate the extremely high failure rate of SMEs through effective use of innovative capabilities and business networking.

Research data for the study was gathered using a close-ended self-administered questionnaire which was distributed to 279 SMEs in the Harare Metropolitan. Stratified random sampling was used to select respondents from the Small and Medium Enterprises Association of Zimbabwe (SMEAZ) databases with a population of 925 SMEs in various industries. The findings reflected that process innovation, organisational innovation and face to face networking activities were dominant. The responses reflected that a variation in either innovation or business networks whilst holding other variables constant caused a change in the performance of SMEs although innovation had a relatively more significant impact.

The study concluded that innovation and business networks have a positive impact on business performance of SMEs. The study also established no significant differences of respondents’ perception on the impact of innovation and business networks on the performance of SMEs across gender, educational level, and level of management.It is against this backdrop that the researcher recommends that the government create a conducive environment for SMEs through establishment of effective research and development centres,sound intellectual property policies which allows special rate or delay in payment for patents and promote regional and national exchange programs. The business practitioners must budget sufficient funds for networking and innovation activities,and make extensive use of internet for research and more create marketing innovative activities like online marketing.