Management Innovation And Sustenance Of Small Business Unit In Nigeria (A Study Of Tailoring / Fashion Design In Aguda, Surulere, Lagos)

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Management Innovation And Sustenance Of Small Business Unit In Nigeria (A Study Of Tailoring / Fashion Design In Aguda, Surulere, Lagos)


Abstract


This study assessed the impact of management innovation on sustenance of small business unit. The study employed the descriptive survey research design. The sample size consisted of 150 respondents drawn from tailoring / fashion business area at Surulere Lagos. A 20- item structured questionnaire was designed to elicit responses from the sampled population on management innovation and sustenance of small business unit. The Pearson Correlation Statistics was utilized with the help of Special Package of Social sciences (SPSS) to test the four hypotheses stated for the study.

Results showed among others that the tested tailoring/ fashion design differed significantly in design, marketing and sales from those best practices, there was significant difference between product design and implementation of Nigeria tailoring / fashion design and those of best practice, there was significant impact of education, training and years of work experience on tailoring fashion design business performance and that significant relationship exists between management innovation and sustenance of small business units.

On the basis of these findings the recommendations were made which include: individual goals should derive from strategic innovation direction and overall entrepreneur goals; small business entrepreneurs should know what customers needs are through needs assessments; education and training should be given to small business owners to make them to be leaders in their business and government to create enabling environment for small business unit to survive.


Chapter One


Introduction

1.1 Background of Study

Innovation is defined as the process through which an invention or idea is translated into a good or a service from value can be derived (Kantor, 2001). It further explains that innovation should be able to satisfy a defined need. Invention differs from innovation in that it refers to a more direct creation of an idea which is directly used in the production of a product or service delivery. The understanding of innovation has been interpreted differently in different sectors. For example economists understand innovation in terms of the economic factors and they therefore have taken a more market conclusion rather personal perspective (Kemp, 2003). The study therefore tries to relate how Innovation affects the sustenance of SMEs.

A number of theories have been put in place to explain this relationship. According to Schumpeter theory of Innovation, Schumpeter (1935) he argued that changes in the economic status results in a response from the environment in which the economy operates which includes also the coming up of new ideas to respond to the competitive nature of the market and demands of the market. Schumpeter argued that these changes result in to the innovation of new ideas to respond to these demands hence the world is always innovates to respond to the ever changing demands of the market. This theory also concurs with the current market trends and how the entrepreneurs respond to these market changes. Another theory that explains this concept is the Imitation Theory of innovation by Marty, A.G (1955) who argued that people tend to copy and improve on whatever is in existence to gain a competitive advantage. This study with therefore seek to find the relevance of Schumpeter’s theory in the SMEs market in Surulere and discuss its relevance to the market forces and the competition in the market. The study tried to justify how the various SMEs respond to the various needs in the market to fulfill their potential in the market to ensure customer satisfaction and also for the profitability of the business.

1.1.1 The Concept of Innovation

Innovation is defined as the process through which an invention or idea is translated into a good or a service from value can be derived (Kantor, 2001). It further explains that innovation should be able to satisfy a defined need. Invention differs from innovation in that it refers to a more direct creation of an idea which is directly used in the production of a product or service delivery.

The understanding of innovation has been interpreted differently in different sectors. For example economists understand innovation in terms of the economic factors and they therefore have taken a more market conclusion rather personal perspective (Kemp, 2003). They further argue the forces of demand and supply affect the rate at which innovations are developed as Ruttan (1984) noted that scarcity is the mother of inventions. Schumpeter (2000) simply defined it as carrying new combinations; therefore, these new combinations should come with new product features which are market friendly.

Innovation has been applied in several areas that is product, process and even market. Product development which involves creating entirely new set of products and the firms involved in such initiatives tend to last longer than the conservative ones (Kemp, 2003). It has been noted that businesses that come up with new ideas tend to last longer are always very competitive in the market. The good examples in Nigeria are Equity bank and in the telecommunications sector Safaricom limited. Safaricom came up with a money transfer service called Mpesa which is now known globally and this has helped Safaricom to diversify her revenue sources and also avoid overreliance on voice call revenue which faces a lot of competition in the market (Economic Survey Report, 2005). Equity bank has also come up with Equitel which is a money transfer services which makes her customers get everything under one roof hence customer loyalty is greatly improved. This makes innovation cornerstone of almost all successful businesses (Kantor, 2001).


1.2 Research Problem

The turbulent nature of the market depending on the product or service the business has to offer makes it necessary for the business to engage in innovative activities to cater for the ever changing needs of the customers, due to this, most SMEs in Lagos have failed to see their second stage of growth. The competitive nature of the market, customer behavior and need change, globalization, scarce resources and low life span of SMEs are some of the challenges being faced by SMEs. It therefore means taking up innovation is critical for the survival of these SMEs (Kiraka, 2013). Starting and operating a small business comes with a possibility of success as well as failure, this study therefore sought to explore the relationship that exists between management innovation and sustenance of SMEs.
The study concentrated on the retail outlets in Surulere to discover the extent to which these outlets embrace the concept of Innovation. The outlets will include the retail and wholesale shops, pharmaceuticals, Food and accommodation outlets, clothing and textile outlets. Data was collected from these different sources to include the diverse nature of the SMEs in Lagos. The information from the mentioned sources was gathered through use of questionnaires and even direct verbal interviews to get more information from the respondents.

A study by Amanakwe (1995) in Nigeria on the relationship between innovation and growth of SMEs in Imo state in Nigeria brought out a close relationship between their survival, growth and profitability when they embrace innovative ideas and come up with products that outcompete other interested parties in the or area of business. P.A, G (1995)

There however still exists a gap on how innovation aid the sustenance of SMEs and how the customers embrace the idea. The study therefore sought to find out the extent of SMEs engagement in Innovation in Surulere. What challenges do they experience in the process and most importantly, what impact does innovation have on the sustenance of these SMEs?


1.3 Research Objectives

The objective of the study is to determine the impact of Management innovation and sustenance of SMEs in Surulere in Nigeria.

Specific Objectives

  1. To identify the types of Innovation management types used in sustaining SMEs in Surulere.
  2. To identify the benefits of Innovation management to SMEs
  3. To identify the challenges of innovation management in SMEs.

1.4 Research Questions

  1. What is the impact of Innovation management in sustaining SMEs in Surulere.
  2. To identify the types of Innovation management types used in sustaining SMEs in Surulere.
  3. To identify the challenges of innovation management in SMEs.

1.5 Significance of the Study

The findings of this study will help SMEs in Nigeria and other regions, with an insight into the benefits of using sound financial planning and management to predict the success or failure of the businesses, based on the orientations prevalent and therefore choose what would be the best outfit for their practice as a continuous performance strategy.

The government of Nigeria and Surulere government can use the findings for the research to assist in policy formulation and development of a framework for critical management factors affecting the sustenance of SMEs enterprises in Nigeria. Policy- makers will use the knowledge and data to adjust or strengthen the position in businesses policy formulation.


Chapter Five


Summary of Findings, Conclusion and Recommendations

5.1 Summary of Findings

This study investigated the relationship between innovation and the sustenance of small and medium enterprises in Surulere L.G.A. As discussed in the introductory section of this paper, SMEs have been recognized worldwide for their role in wealth generation, employment creation and poverty reduction. According to Nigeria’s economic recovery strategy for wealth and employment creation, SMEs contribute 18% GDP, plays a critical role in easing foreign exchange constraint, penetrating new markets, stimulating growth and development especially in rural areas.

The sector also acts as the seed bed for entrepreneurial pursuits therefore the need to stay relevant and grow which comes through innovation. Innovation is a dynamic measure that not only sparks growth but also enables businesses to break status quos and leapfrog to superior performance. Consequently, this paper sheds some light on the innovation importance through reviewing past and current relevant literature discussing the relationship between innovation and the sustenance of SMEs. The study has revealed a close relationship between management innovation and sustenance of SMEs. However, there are challenges with the market in terms of maintaining the status quo and accepting the value added products and improved services.


5.2 Conclusion

Most of the business in the general trade, retail and wholesale stores type of business were seen to be more innovative in process and position types of innovation. The ones that were indeed innovative recorded to a great extent benefits such as sales of new products, business opportunities, creation of new markets, improve profits, brand creation and bringing in new customers. The small and medium enterprises in the accommodation and catering industry in Surulere leaned more on service, product and paradigm types of innovation where with that came benefits such as improvement of the quality of the product and services offered, create a brand, business opportunities, creation of new products, improvement of profits and maintaining and bringing in new customers.

The challenges experienced according to the study were high investment cost, loss of focus on existing old products and services and government regulations. The study found that professional and technical services innovated more on the process innovation with benefits such as repeat clients, new clients and more business opportunities and as a result they performed better due to the increase in daily profits, new branches and more employees. The challenges that they faced were government regulations and lack of proper training.

The agricultural types of businesses in Lagos were found to innovate more around process innovation. The benefits recorded include reducing environmental damage, creating new business opportunities, markets and reducing costs.

The challenges faced by the agriculturalists were lack of proper training and not being aware of new products and services. The results from the study indicated no relationship whatsoever between process innovation and business performance. In the private education, health and entertainment industries, innovation was seen in service, positioning and paradigm where benefits achieved included, sales of new products, business opportunities, and improvement of quality of products and services, creation of new markets, improvement of profits, creating a brand and bringing in new customers.

Transport, storage and communication type of businesses were more innovative in the process, product and positioning. The benefits observed here included improvement of sales, creation of new markets, brand creation, reduction in production costs and reduced environmental damage and attracting new customers.


5.3 Recommendations

The findings of the study have shown a positive relationship between management innovation and sustenance of SMEs. The study hence recommends embracing innovation after research which suits the Small and Medium enterprise best, not any innovative activity will lead in to positive results. The study further proposes the following for consideration to stimulate innovation; have mechanisms to implement tax incentives to support high cost innovations, involve key stakeholders in the business types and academia in research and development for innovation, develop policies to encourage in sectors listed in this study such as informal sector that are innovative and other policies to sustain innovation, identify and reward innovative SMEs to promote innovation, initiate programs that tap innovators from when they are young and to encourage banks and other stakeholders to fund more innovative and viable innovative ideas.


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