Abstract

Innovation has been touted to be the central catalyst of entrepreneurship. This view has dominated research in start-ups as well as small and medium enterprises. Therefore, the relationship between innovation and firm performance has been a subject of interest to many researchers and policy makers. Through a longitudinal approach, this study investigated the influence of product innovation on the performance of Haco Tiger Brands, a medium sized fast-moving consumer goods (FMCG) company in Kenya’s East Africa market. The study looked at the product innovation activities within the company for a period of 7 years for a total of 35 products across the five major brand categories of the company. Using a secondary data capture form, data on sales revenues for both the company and innovated products for the past 7 years was obtained. Data on the innovated products launch time and type of innovation was also obtained. Using time series and linear regression analysis, the results indicate that the total company sales revenues less innovation grew at a slower rate of 50% as compared to growth when product innovation sales revenues were included in the total company sales revenues accounting for a faster sales growth rate of 76%. The influence of product innovation on performance was statistically significant (p<0.05) accounting for 92.19% variation in performance. These findings provide irrefutable empirical basis that product innovations have significant revenue growth rates, hence the need for managers of medium sized companies to invest in research and development to sustain product innovation and spur growth. The results sit well within theory and other empirical studies with additional contribution to methodology. Based on the study limitations, further areas for research have been suggested. Published In: Bode, Freitag (Eds.): Universities, Entrepreneurship and Enterprise Development in Africa - Conference Proceedings 2018. Sankt Augustin, Germany, 13-14 September 2018

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