Effects of Innovation on Entrepreneurial Performance among SMEs in Malawi: Evidence from Selected Telecommunication Industries

Innovation remains critical for SME competitive viability in developing countries, yet empirical evidence on its effects within resource-constrained African telecommunications sectors remains limited. This study examined the effects of innovation on entrepreneurial performance among telecommunication SMEs in Malawi. Guided by three key objectives, the research assessed innovation effects on performance and examined challenges affecting innovation implementation. A convergent parallel mixed-methods design was employed, combining quantitative and qualitative approaches. Data were collected from 121 survey respondents and 10 interview participants operating in Lilongwe and Blantyre between November and December 2025. Quantitative analysis utilized descriptive statistics, Pearson correlation, hierarchical multiple regression with assumptions testing, Baron and Kenny moderation analysis, and Bonferroni-adjusted hypothesis testing. Qualitative data were analyzed using Braun and Clarke’s thematic framework. Findings revealed widespread adoption of innovation across product, process, marketing, and organizational dimensions (M = 3.61–3.72) through bundled strategies. Entrepreneurial performance was moderate (M = 3.55), with customer satisfaction emerging as the strongest dimension. Innovation demonstrated a significant positive effect on performance (r = 0.400, B = 0.520, p = 0.001), explaining 16% of variance beyond control variables. Implementation challenges were of moderate-high severity (M = 5.15–5.32) but did not significantly moderate innovation effectiveness (B = -0.042, p = 0.502), instead acting as barriers to adoption. The study concludes that telecommunication SMEs possess genuine innovation capabilities that generate measurable performance benefits despite implementation challenges. It recommends financial innovation, regulatory differentiation, skills development, infrastructure prioritization, and evidence-based innovation promotion strategies to strengthen SME performance in resource-constrained contexts.