Factors influencing innovation among small, micro and medium enterprises (SMMEs) in marginalized settings: evidence from South Africa

Abstract

Achieving inclusive outcomes through innovation is such that small, micro and medium enterprises (SMMEs) can no longer be ignored. This study aims to investigate the determinants of innovation activities among SMMEs in a developing country context using evidence from South Africa. Using the binary logistic regression model, this paper analysed a dataset of 643 SMMEs located across eight district municipalities in South Africa. The study findings revealed that there are dynamic innovation activities occurring among SMMEs located in rural and/or informal settings, focusing on making incremental changes to production and delivery processes adopted from elsewhere. The study identified several factors that hinder or enhance innovation activities among SMMEs, revealing that the factors associated with innovation activities vary depending on the nature of the innovation activity. Empirical insights from this study could better inform strategies used by policy makers to promote innovation that strengthen the competitiveness of SMMEs and innovation that is socially inclusive.