EFFECT OF INNOVATION ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMES) (A STUDY OF SOME SELECTED SMES IN ABUJA MUNICIPAL AREA COUNCIL)

This study examined the effect of innovation on performance small and medium scale enterprises. The specific objectives of the study were to examine the effect offirm product innovation on the performance of SMEs, determine the effect of product innovation on customers * satisfaction and to ascertain the effect of process innovation on performance of selected SMEs. The population of the study consisted of all the SMEs in Abuja Municipal Area Council. A random sample of three hundred (300) SMEs was selected. Collection of data was done through a structured questionnaire. Frequency, percentages and mean score were used to analyze data. A mean score of 2.5 and above was considered significant. Chi-Square was used to test hypotheses. Statistical Package for Social Sciences (SPSS) was used to analyze data. Findings showed that innovation improved the profitability of SMEs, product innovation increases customers ’ satisfaction while process innovation enhances the productivity and competency of employees. The study recommended that due to the fact that cost of attracting new customers is more than cost of retaining existing customers, SMEs should from time to time launch new products or improve existing ones. They should also adopt process innovation, technological innovation and organizational innovation in order to increase employees’ productivity.