Innovations in the Micro - Small to Medium Enterprises Sector Towards Economic Development in Zimbabwe

Abstract

Innovation has many enablers that are related to both internal and external environments. The internal environment covers the company’s operations, market strategy and vision, skills, creativity, and quest for innovation, among others. This paper investigated opportunities and challenges for Micro-Small to Medium Enterprises in Zimbabwe to successfully emerge as agents of economic development through innovation. The analysis includes the personal characteristics that make up MSMEs as well as the contemporary environments in which MSMEs operate. This paper is grounded on Schumpeter’s notion that entrepreneurship contributes to economic development through the interplay of new firm creation, innovation and competition. The study adopted a case study research design as Bulawayo was utilized as the case in Zimbabwe. Purposive sampling was utilized in identifying study participants for focus group discussions and random sampling was utilized in identifying 142 respondents for questionnaires. The study's findings revealed that the MSME's sector is motivated to innovate so as to improve the way and speed in products formation. Interactions and multiple social networks are also established in the MSMEs sector in the process of innovation based on kinship, friendship ties and manufacturer- client relationship. The MSMEs studied focused on adapting, imitating and modifying existing innovations rather than pursuing genuine Schumpeterian innovation. The study notes that innovation is happening but it is not a priority for the MSME sector and therefore policies aimed at catching up with modern technology should be the central focus in providing assistance for entrepreneurs and these are suggested in this paper. The results also revealed that while economic profit is a priority for most entrepreneurs, MSMEs exists mainly to alleviate poverty through income generating activities and contribute to economic development by providing employment and income for the poor. The study concludes that innovation is a results of demand driven synergies which are prevalent in the society and the MSMEs' sector skills and knowledge, which therefore means that there are many opportunities to be tapped but however there is lack of investment and robust policy which need to be unlocked. The study recommends that innovations in the MSMES' sector need a holistic attention from stakeholders of the country's industrialization plans not to be merely seen as rhetoric and politicking. Modernization and technology upgrading along with innovative methods of capacity building and marketing of products are necessary. A holistic innovation policy for the MSME sector can also be made to promote innovation. The policy, institutions, and supporting framework have to be improved to remove MSMEs’ perception that government is limiting their success. Over time, this can be done with the proactive participation of experts and policy makers to benefit Zimbabwe's MSMEs.