Effect of Innovation on The Performance of SMEs in Karu Local Government Area, Nasarawa State.

Abstract

Most Small and Medium Enterprises (SMEs) in Nigeria have engaged in various innovation strategies, including market and process innovations, while organizations like SMEDAN provide support through training and resources. Despite these initiatives, many SMEs continue to face performance challenges. This study examined the effect of market innovation and process innovation on the performance of SMEs in Karu Local Government Area, Nasarawa State. A survey research design was employed, with structured questionnaires administered to a total of 346 SME owners and managers. The data were analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM) to test the formulated hypotheses. The study found a positive and significant effect of market innovation on SME performance, while process innovation showed a negative and insignificant effect. The study recommends that SMEs prioritize adopting innovative marketing strategies to enhance customer engagement and market positioning. Additionally, SMEs should carefully implement process innovations in alignment with their operational goals to avoid inefficiencies. Collaborating with industry experts could further optimize their innovation strategies, leading to improved overall performance.