THE IMPACT OF PRODUCT INNOVATION ON CORPORATE GROWTH AND SUCCESS(A STUDY OF SELECTED SMALL AND MEDIUM SCALE ENTERPRISE IN PORT HARCOURT.)

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Prior to the discovery and exploitation of oil in Nigeria. Agriculture was primarily the mainstay of the economy and contributed 80-90% of government foreign earnings. But with the exploitation of oil till date, there has been an essential replacement of the previous composite sector of traditional primary export with oil. Over times, these traditional exports were even imported into the country to supplement local production. During the 70s and 80s Nigeria was importing virtually everything, meat products, grains, clothing’s, etc.

Worse still, the import content of our manufactures became unduly high such that industry group was exempted. Consequently, the Nigeria economy over time became characterized by a mono-product exclusively oil which subsequently  result to over dependence on huge external debts as a result of excessive borrowings for capital development, weak manufacturing capacity, it’s imperative to note here that most of these manufacturing outfits were foreign owned and their profits were repatriated to their home countries. Ndiomu(1988) observed that for the fact that Nigeria economy was structurally imbalanced and have become very conspicuous since the end of the Nigeria civil war. However, because of the fortunes of the petroleum sector the real impact was not felt until now.

In a bid to redress the imbalance as well as promote rapid economic development of the country, successive governments has tried to encourage establishment, support and funding of small and medium scale enterprises.

Furthermore, SMEs in Port Harcourt have been known to improve the linkage among the diverse sector of the economy by providing opportunities for developing and adopting appropriate technological approaches, offer excellent breeding ground for entrepreneurial and managerial talent, promotion of industrial diffusion and regional balance etc.

It’s with the view to realizing these impacts as well as stemming the out flow of funds through excessive exports and expertise coupled with the significant contribution that SMEs have made to the growth and success of most economy that has stimulated the interest of government.

In Port Harcourt, opportunities abound for SMEs in virtually every field of economic enterprise, block molding, printing, poultry etc. This has led to government develop different policies, programs and incentives aimed to encourage not only birth of new SMEs but also to develop existing ones. However, the growth rate has been slow and failure and even death of SMEs have been quite common.

Logic dictates that innovation is powerful factors behind the success of any enterprise operation research have shown that innovative firm successfully proper at the expense of their less able competitors. Indeed, evolutionary theory of economic of change speculates that product innovation and corporate growth and success are relative drives. Nelson and winter (1982). For a business to survive in a context or competitors, it must adopt its policy. To be successful over a long period of time. Business must develop the ability to innovate and then to profit from that innovation. Nelson (1991). Different endowment of innovation capabilities on corporate growth activities points to some regularities across SMEs.

On the other hand, corporate growth rates appears almost random can be reasonably approximated by Gibrat law. Geroski (1998) accordingly which the probability of a given proportionate change in size specifies period is the same for all SMEs.

The ability to innovate has caused researcher to study activities leading to initiative advancement of individuals. SMEs finish a strong increase to employment and economic growth specifically due to their innovative activities which become a main force of explaining competitive advantage. Accordingly, the values fashion by product innovation shows potential circumstances that uncovered new ways of doing things or new product and process that add benefits to economic fortunes.

The support given for the start up of SMEs necessitates those becoming important engines for innovations and corporate growth venture strategies advancement and improvement.

1.2   STATEMENT OF THE PROBLEM

In virtually every street both in the urban and rural areas across Port Harcourt, there seems to be a dominance of SME type of business organizations. This is largely due to the enabling factors and natural resources, market demand for goods and services and government interest in the development, growth and survival of SMEs for social economic development of Port Harcourt.

However it’s sadden to note over the year, that majority of these SMEs does not perform well and hence do not expand their scope of operations. The above scenario contrast sharply with the tremendous success recorded in other country. The most fundamental and logical cause of the inability of SMEs to perform very well expand their operation as well as survive has been absence of clear policy and practice of product innovation to meet challenges of the changing socio-economic and political trend in general. It’s against this background that this study is designed to evaluate the impact of product innovation on corporate growth and success. Our focus is on some selected small and medium scale enterprise (SMEs) in Port Harcourt.

1.3   OBJECTIVES OF THE STUDY

The main objective of the study is to highlight the impact of product innovation on growth and success of SMSs in Port Harcourt. Specifically the study is directed towards:

1. Identifying the contributions made by product innovation to the development and success of small and medium scale enterprises in Port Harcourt.
2. Identifying the various processes and strategies adopted by SMEs in Port Harcourt during product innovation.
3. Highlight the internal structural requirement as well as the macro-environmental conditions that engender and facilitate product innovation in SMEs in Port Harcourt.
4. Examine institutional and governmental instruments policies factors that constrain SMEs ability to successfully carryout product innovation.
5. Recommending strategies for enhancing the proficiency of product innovation in SMEs with a view to increase the level of success in SMEs.

1.4 RESEARCH QUESTIONS.

The following research questions are designed to help the researcher achieve her objectives.

1. When products are innovated, does it attract strong patronage and profitability?
2. Is there and relationship between the size, resources and managerial competences of small and medium scale enterprise and its ability to successfully carryout product innovation?
3. Has the socio-political technological and economic environment impacted the success of product innovation in small and medium scale enterprise?
4. To what extent has product innovation impacted the growth and success of small and medium scale enterprises?
5. What are the strategies adopted for the proficiency of product innovation by small and medium scale?

 1.5 SIGNIFICANCE OF THE STUDY

This study will afford a successful and thorough examination of current practices in product innovation in Port Harcourt, as well as expose influential and critical factors and processes that determine the success of product innovation.

Furthermore, it will highlight the socio-economic impact to product innovation in small and medium scale enterprise in Port Harcourt as provide recommendations for enhancing the proficiency of the process with the view to increase the growth and success of SMEs.

Finally, it will provide a guide to operations of SMEs and government policy makers on the proper frame to adopt towards product innovation of SMEs with the view of enhancing effective growth and success.

1.6 SCOPE OF THE STUDY

This study will attempt to be reasonably represented as possible. If it were to be within the means of the researcher, all SMEs in Port Harcourt will be examined. Since this form the scope of the study.

1.7 LIMITATIONS OF THE STUDY

This study will be limited to some of the SMEs in Port Harcourt because of time and financial constraints.

Furthermore, the selections would be done in such a way that they are located all over the respective enterprise to ensure adequate representations.

1.8 DEFINITIONS OF TERMS

In this study, it will be very important to define key terms that will be featuring. They include the following:

1. Innovation: It’s the process of translation an idea or invention into goods or service that create value or for which customers will pay. To be called an innovation, an idea must be replication at an economical cost must satisfy a specific need.
2. Product innovation: this is the creation and subsequent introduction if goods and services that is either new or improved version of previous goods and service. In other words it helps to create new product that customers will love and want to follow. They also track how customer responds to their product.
3. Small and Medium Scale Enterprise: this is an enterprise that has asset base; its use for the purpose of creating job opportunities and also, it’s the engine of economic growth and it promotes equitable development. Their advantage is employment potential at low capacity and its well establish.
4. Mono-product: this is an economy which almost exclusively on the export of a single product, i.e. oil
5. Import: it’s a word that was derive from the word “port” since goods often shipped via boat to foreign countries
6. Export: it’s a function of international trade whereby goods produce in one country are shipped to another country for future sales or trade.
7. Economic Development: is the sustained concerted action of policy makers and communities that promote the standard of living and economic health of a specific area.
8. Growth; is an investment style that look for stock with strong earnings or revenue thereby generating large profit and expand its workforce and also increase or improve some measures of an enterprise success
9. Success: It’s the financial rewards and also the ability of doing something most enjoyed and passionate.
10. Repatriation: is the capital flow from a foreign country to the country of origin. It’s usually refers to returning returns on a foreign investment.
11. Traditional Export: This is seen as all other exports that have been in the traditional export revenue sources of government as well as those that have undergone the processing.