Technological Innovation and Performance of Informal Dairy Enterprises in Kenya: A Product Diversification Perspective

Ann N. Kariuki¹, John M. Kihoro² and Mike A. Iravo³

¹Department of Business Management, Meru University of Science and Technology, P.O Box 972-60200, Meru, Kenya

²Directorate of Computing and e-learning, Cooperative University College of Kenya, P.O. Box 24814-00502, Karen, Kenya

³Department of Entrepreneurship, Technology and Leadership Management, Jomo Kenyatta University of Agriculture and Technology, P.O. Box 62000-00200, Nairobi, Kenya

Cite this paper

Ann N. Kariuki, John M. Kihoro and Mike A. Iravo. Technological Innovation and Performance of Informal Dairy Enterprises in Kenya: A Product Diversification Perspective. Journal of Business and Management Sciences. 2018; 6(4):163-170. doi: 10.12691/JBMS-6-4-4

Abstract

Technological innovation is a key driver of product diversification and change in the dairy industry. However, evidence suggests that in Kenya and Africa at large, small and medium enterprises’ adoption of technology is slow, with most of them operating at low levels of technology and efficiency. The effect of technological change in both the small formal and informal businesses has suggested low performance according to previous studies. This paper presents empirical evidence on the extent to which level of technological innovation in relation to product diversification influences performance of Small Scale Milk Vendors (SSMVs) in Kiambu County, Kenya. The empirical results indicated that level of technological innovation in the form of machinery and equipment was positively associated with performance of informal dairy enterprises. Based on the findings, the paper discusses the strategy, policy as well as the research implications for the informal dairy sector in Kenya.

Keywords

dairy, informal, performance, product diversification, technological innovation

Copyright

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References

[1]	Culas, R. and Mahendrarajah, M. (2005). Causes of Diversification in Agriculture over Time: Evidence from Norwegian Framing Sector. Paper prepared for presentation at the 11th Congress of the EAAE (European Association of Agricultural Economists), 'The Future of Rural Europe in the Global Agri-Food System', Copenhagen, Denmark, August 24-27, 2005.
[2]	Birthal, P., Joshi, P., Roy, D. and Thorat, A. (2007). Diversification in Indian Agriculture towards High-Value Crops: The Role of Smallholders. International Food Policy Research Institute (IFPRI) Discussion Paper 00727.
[3]	Rammer, C., Czarnitzki, D., and Spielkamp, A. (2009). Innovation Success of Non-R & amp; D-Performers: Substituting Technology by Management in SMEs. Small Business Economics, 33 (1), 35-58.
[4]	Kurwijila, L. and Bennet, A. (2011). Dairy Development Institutions in East Africa: Lessons Learnt and Options. Food and Agricultural Organization of the United Nations. Rome.
[5]	Mothe, C. and Thi, T. (2010). The link between non-technological innovations and technological innovation. European Journal of Innovation Management, 13 (3), 313-332.
[6]	Tvedten, K., Hansen, M. and Jeppesen, S. (2014). Understanding the Rise of African Business: Insearch of business perspectives on African enterprise development. African Journal of Economic and Management Studies, 5 (3), 249-268.
[7]	Republic of Kenya (2010). Kenya National Dairy Master Plan; Volume 1: A Situational Analysis of the Dairy Sub-sector. Ministry of Livestock Development. Nairobi: Government Printers. Retrieved September 24th, 2013 from http://www.livestock.go.ke.
[8]	Kamundi, K. (2014). Corporate Leadership in Dairy Industry: Case of Kenya Dairy Board. European Journal of Business and Management, 6(33), 22-35.
[9]	Export Processing Zones Authority (2005). The dairy Industry in Kenya. EPZA; Nairobi. Retrieved May 26th, 2013 from www.epzakenya.com/.
[10]	Pratali, P. (2003). Strategic Management of Technological Innovations in the Small to Medium Enterprise. European Journal of Innovation Management, 6 (1), 18-31.
[11]	Pedersen, P. and McCormick, D. (1999). African Business Systems in a Globalizing world. The Journal of Modern African Studies, 37, (1), 109-135.
[12]	Lundvall, B., Joseph, K., Kraft, J., Chaminade, C. and Vang, J. (2009). Handbook of Innovation Systems and Developing Countries; Building Domestic Capabilities in a Global Setting. UK: Edward Elgar Publishing.
[13]	Porter, M.E. (1990). The Competitive Advantage of Nations. New York: The Free Press.
[14]	McDougall, F. M. and Round, D. K. (1984). A Comparison of Diversifying and Non-diversifying Australian Industrial Firms. Academy of Management Journal, 27(2), 384-398.
[15]	Kim, D. and Kogut, B. (1996). Technological Platforms and Diversification. Organization Science, 7(3), 283-301.
[16]	Breschi, S., Lissoni, F. and Malerba, F. (2003). Knowledge-relatedness in Firm Technological Diversification, Research Policy, 32(1), 69-87.
[17]	Garcia-Vega, M. (2006). Does Technological Diversification Promote Innovation? An Empirical Analysis for European Firms. Research Policy, 35(2) 230-246.
[18]	Jarrar, N. S. and Smith, M. (2011). Product Diversification: The Need for Innovation and the Role of a Balanced Scorecard. Jamar, 9(2), 43-60.
[19]	Hitt, M., Hosskison, R.E. and Kim, H. (1997). International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms. Academy of Management Journal, 40(4), 767-798.
[20]	Baysinger, B. and Hoskisson, R. E. (1989). Diversification Strategy and R&D Intensity in Multi-Product Firms. Academy of Management Journal, 32(2), 310-332.
[21]	Rothwell, R. (1994). Towards the Fifth Generation Innovation Process. International Marketing Review, 11(1), 7-31.
[22]	Government of Kenya (2003). Economic Recovery Strategy for Wealth and Employment Creation 2003-2007. Nairobi: Government Printers.
[23]	Ebrahim, N. Ahmed, S. and Taha, Z. (2010). SMEs; Virtual Research and Development (R&D) Teams and New Product Development: A literature review. International Journal of the Physical Sciences, 5(7), 916-930.
[24]	Terziovski, M. (2002). Achieving Performance Excellence Through an Integrated Strategy of Radical Innovation and Continuous Improvement. Measuring Business Excellence, 6(2), 5-14.
[25]	Grant, R. M., Jammine, A.P. and Thomas, H. (1988). Diversity, Diversification and Profitability among British Manufacturing Companies. Academy of Management Journal, 31(4), 771-801.
[26]	Chiao, Y., Yu, J., Li, P. and Chen, Y. (2008). Subsidiary Size, Internationalization, Product Diversification, and Performance in an Emerging Market International Marketing Review. 25(6), 612-633.
[27]	OECD (2011). Economic Performance and Structural Change: Innovation as a Key Driver of Sustainable Growth. OECD Reviews of Innovation Policy: Peru 2011, OECD Publishing.
[28]	Jeong, I. (2003). A Cross-National Study of the Relationship Between International Diversification and New Product Performance. International Marketing Review, 20(4), 353-376.
[29]	Kaitibie, S., Omore, A., Rich, K. and Kristjanson, P. (2010). Kenyan Dairy Policy Change: Influence Pathways and Economic Impacts. World Development 38(10), 1494-1505.
[30]	Stichting Nederlandse Vrijwilligers (2013). SNV Kenya/ Netherlands Development Organization: Supply Side Study to Identify Viable Business Propositions for the Dairy Industry Targeting Lower Income Consumers Report. Appendix 3.
[31]	Mugenda, A. (2008). Social Science Research, Theory and Principles. Nairobi: Applied Research &Training Services.
[32]	Cramer, D. and Howitt, D. (2004). The SAGE Dictionary of Statistics. London: SAGE Publications Ltd.
[33]	Levin, J., Fox, J. A. and Forde, D.R. (2010). Elementary Statistics in Social Research (11thed.). USA: Pearson Education.
[34]	Field, A., Miles, J. and Field, Z. (2012). Discovering Statistics Using R. Los Angeles: SAGE Publications Ltd.
[35]	Karanja, A. (2003). The Dairy Industry in Kenya: The Post-Liberalization Agenda. Tegemeo Institute/Egerton University. Retrieved September 27th, 2013 from www.tegemeo.org/documents/other/dairy.pdf.
[36]	African Union Commission (2014). Science, Technology and Innovation Strategy for Africa 2024. Addis Ababa, Ethiopia: African Union Commission.
[37]	Republic of Kenya (2018). Medium Term Budget Policy Statement. Creating Jobs, Transforming Lives-The ‘Big Four’ Plan. 19th January, 2018.