Effect of Supplier and Customer Collaboration on Product Innovativeness: A Focus on Small and Medium-Sized Enterprises (SMES) in Kenya

This study investigated the effect of supplier and customers¡¯ collaboration on product innovativeness in manufacturing SMEs. Using a cross sectional survey design with a sample size of 196, a standard multiple linear regression (MLR) was performed between product innovativeness as the dependent variable and the dimensions of supplier and customer collaboration, as independent variables. The results of the supplier collaboration regression indicated that the predictors explained 45.1% of the variance (R2=.477, Adj R2=.451), F (6, 119) = 18.115, p < .001; t=1.995.; that of customer collaboration indicated that the predictors explained 38.8% of the variance (R2= .388, Adj R2= .358), F (6, 119) = 12.597, p < .001; t=6.441. Understanding customer needs is the only dimension that significantly contributed positively to predicting PI (B = 1.169, p= .056) t=1.930. It is concluded that supplier dimensions of win-win relationships, deep suppliers trust, expertise from suppliers and support in product launch will positively predict PI. Similarly, customer collaboration dimension of deep understanding of customer needs will positively predict PI. The researchers recommend the setting up of SMEs support policies that promote collaborations in research for purposes of sharing information / accessing the diverse knowledge base on new product design, development and production.