Factors affecting innovativeness of small and medium enterprises in Benishangul Gumuz Regional State, Ethiopia

The purpose of this study was to investigate factors affecting the innovativeness of Small and Medium Enterprises (SMEs) in Benishangul Gumuz regional state of Ethiopia and it aims to contribute to innovation literature mostly in emerging nations. The study used both descriptive and explanatory research designs, along with quantitative and qualitative approaches. The sample size of the study consisted of 354 managers of enterprises who were selected using a simple random sampling technique. Data was collected through a questionnaire from managers and interviews with officials from the small and medium enterprises agency. The collected data was analyzed using descriptive, independent samples t-test, correlation, and regression analysis. The descriptive finding indicated that lack of access to finance; weak government support, poor organizational innovation culture, technological incapability, inadequate research and development centers, and shortage of skilled personnel are the major barriers for enterprises to engage in innovation. The study also revealed that there was no significant difference in the level of innovativeness of small and medium enterprises between male and female innovators. Additionally, the correlation analysis revealed that there is a significant relationship between technological capability, government support, organizational innovation culture, access to finance, research & development, skilled personnel, and innovation of enterprises. Furthermore, the regression analysis showed that access to finance had the most significant impact on the innovativeness of SMEs in the Benishangul Gumuz regional state of Ethiopia. This study assessed the factors affecting the innovativeness of SMEs in BGRS of Ethiopia. It was found that there is a lack of existing literature on this specific topic. Though there are studies in Ethiopia that focus on factors affecting the growth and performance of SMEs, there is inadequate literature on the factors of innovativeness of SMEs, which is a constraint for this study. This makes it difficult to compare the results of the current study with previous studies conducted in Ethiopia in general and BGRS in particular. Moreover, the study included seven factors that affect the innovativeness of SMEs. Although there may be other relevant factors affecting SMEs’ innovativeness, they were not considered in this study. Future research should consider additional factors such as entrepreneurial training, networks & collaborations, access to infrastructure, & leadership entrepreneurial competency, which could also impact SMEs’ innovativeness. Additionally, the study was conducted using a sample from only one region, which may limit the generalizability of the findings. Future research should involve multiple regions of Ethiopia to increase the sample size and improve the generalizability of the findings. Furthermore, the study used a cross-sectional survey design. Future research should consider using a longitudinal survey design to identify potential variations in the factors affecting enterprise innovativeness over time. Despite these limitations, the study's results can provide valuable input for further research and policymakers in Ethiopia, especially in the BGRS region, regarding SMEs’ innovativeness. The findings of this study would provide valuable input for managers of SMEs to consider various factors that inspire enterprises to become more innovative. Additionally, the result of this study can help business owners identify and address the elements that affect their ability to innovate, enabling them to take proactive steps to enhance their innovative capabilities. This, in turn, can contribute to economic growth, poverty reduction, and sustainable development in Ethiopia. Innovative SMEs can contribute to sustainable development goals in several ways. They can design new business models that take environmental and social impacts into account, such as using cleaner technologies and reducing resource inputs. Moreover, innovative enterprises can incorporate sustainable development goals into their strategies by considering their business models, supply chains, procurement practices, and research and development processes. Furthermore, these enterprises can promote responsible consumption and production by minimizing waste, selecting environmentally friendly materials and packaging, and implementing recycling and waste management initiatives. Additionally, innovative enterprises can use the sustainable development goals as a framework to communicate their performance targets and actions while engaging with stakeholders. In general, innovations can significantly reduce costs associated with progress, offering opportunities to develop new solutions, approaches, and environmental actions that contribute to the sustainable development of Ethiopia. Therefore, providing adequate credit facilities, government support, utilizing up-to-date technology, promoting an innovative organizational culture, establishing research and development centers, employing hard-working and skilled personnel are essential for enhancing the engagement of small and medium enterprises in innovative activities. This study makes a valuable contribution to the existing literature on the factors of innovativeness in small and medium enterprises. The study aims to assess the influence of various factors such as technological capability, government support, access to finance, research & development, organizational innovation culture, gender, skilled personnel on the innovation of Small and Medium Enterprises.