Exploring factors affecting product innovation practice among micro and small scale enterprises: the case study of Debre Berhan Town, Ethiopia

Abstract

Innovation is considered a pivotal activity in firms and business units since they are facing an increasingly competitive atmosphere in the domestic and international markets. Thus, the study’s main objective is to examine the factors determining product innovation practice among micro- and small-scale Enterprises in Debre Berhan town, Amhara Region, Ethiopia. For this purpose, the study used primary data. The data were collected from 294 owners/managers of Micro and small-scale enterprises through structured questionnaires. The binary logistics model examined the factors affecting product innovation practice. The study revealed that access to finance, access to training, access to technology, availability of incentive schemes, gender of the owner/manager of the enterprises, and networking with external knowledge, respectively, affected the enterprises’ product innovation practice positively and significantly at a 5% level of significance. This study suggests that the government should support micro and small enterprises to access technology and training. Besides, the government and other stakeholders ought to enable Micro and small-scale enterprises to create networks with external knowledge; provide incentives for innovative Micro and small-scale enterprises; provide capacity-building training on enhancing creative self-efficacy for female enterprise owners/managers.