Assessing Effects of Business Innovations on Financial Performance of Small and Medium-sized Enterpr

Despite the fact that small and medium-sized businesses have a substantial beneficial impact on economic growth and job creation, small businesses in Kenya are constantly crumbling. Their contribution to Kenya's gross domestic product is threatened by their high rate of collapse. Although empirical studies from developed economies have revealed that business innovations are an appropriate approach to addressing small business financial performance, there is little documentation in Kenya on business innovations as a key determinant of small medium enterprise financial performance. As a result, this study looked at how business innovations affect the financial performance of Kenyan small and medium businesses. The study employed a descriptive research design to target 258 small medium firms in Garissa County, from which a sample group of 155 respondents was chosen using stratified proportionate random selection. With the use of SPSS software Version 21.0, data was obtained from primary sources using a questionnaire and analysed using a quantitative analytical methodology to produce descriptive and inferential statistics. The study concludes that each of financial institutional innovation, financial product innovation, and marketing innovation has a statistically strong positively significant effect on financial performance of small and medium-sized enterprises in Kenya at the 0.05 (5%) significance level, while each of marketing innovation and financial process innovation has a statistically strong positively significant effect on financial performance of small and medium-sized enterprises in Kenya at the 0.05 (5%) significance level. The report suggests that Kenya's financial performance be improved by aggressively implementing financial institutional innovations, embracing financial product innovations, developing and acquiring marketing resources, and appreciating and supporting modern financial process innovations.

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