Technological innovation in Zimbabwean SMEs

SMALL to medium enterprises (SMEs), due to their unique characteristics, are found to have inherent capabilities to undertake technological innovations successfully across industries and nations. While there is considerable empirical evidence to throw light on SME innovation contributions in the context of developed countries, there is hardly any evidence to reveal how innovative SMEs are in developing industrialising economies like Zimbabwe’s.

Technological innovation and SMEs: significance of relationship

SMEs have been considered one of the driving forces of modern economies due to their multi-faceted contributions in terms of employment, exports and technological innovations, among others. Among its contributions, its ability to innovate assumes significance because in modern economic thinking, innovation is ascribed a central role in the evolution of industries.

Technological innovation is a key factor in a firm’s competitiveness and it is unavoidable for firms, which want to develop and maintain a competitive advantage and/or gain entry in to new markets. Technological innovation has the potential to spur growth of individual enterprises at the micro level and give a new dimension to industry growth at the macro level.

They offer a major explanation for why growth rates at the firm, regional or national level differ. Therefore, technological innovation is at the heart of economic change. Technological innovation is the ultimate source of productivity and growth. It is the only proven way for economies to consistently get ahead.

Technological innovation has been defined in different ways in different contexts. In the context of a developing country, it is defined as the process by which firms master and implement the design and production of goods and services that are new to them irrespective of whether they are new to their competitors, their customers or the world.

It is a process or product that is new to the economy of a particular developing country, regardless of whether it has been used before elsewhere. Among firms of different sizes, SMEs including start-ups, across industries and economies have the unrealised innovation potential.

This is primarily attributed to their inherent characteristics such as flexibility, better adaptability and receptivity, effective internal communication, simple organisational structure and quick decision making.

There is substantial empirical evidence to show that a number of SMEs in a wide variety of sectors across countries do engage in technological innovations, and that these innovations are likely to be an important determinant of their success.

About 50 percent of all innovations and 94 percent of all radical innovations in the US since World War II have come from new, small firms. In advanced countries, SMEs are promoted as the “seed bed of innovations”, among others. However, the ability and innovative capacity of SMEs varies significantly depending on their sector, size, focus, resources, regions and the business environment in which they operate.

It is in this backdrop that calls for policy imperatives for promoting innovations in the Zimbabwean SMEs sector are made. The SMEs sector in Zimbabwe employs millions.

Technological innovation in Zimbabwean SMEs: Current status and achievements

There are three relevant questions with respect to Zimbabwean SMEs. First and foremost, it is important to know whether at all, Zimbabwean SMEs are technologically innovative. Secondly, if yes, to what extent? Thirdly, what is the nature of their innovations and what are their achievements?

These questions assume significance because Zimbabwe has not yet gained international attention for its industrial innovations, let alone SME innovation. SMEs in general face innumerable constraints for undertaking innovations — of them the most prominent one is technical capability.

Even where SMEs have some internal technical competence, they often find the need for external support. However, a majority of SMEs have carried out innovations only with internal efforts.

This could be due to their lack of internal technical strength or involvement in very limited or occasional innovations. In both cases, they would hardly scout for or be able to convince and obtain external support.

Those SMEs, which have obtained external support, have better internal technical competence characterised by technically qualified entrepreneurs and exclusive in-house design facilities. Such SMEs carry out innovations more frequently, involving both products and processes. All this indicates that SMEs should have internal technical capability and have access to greater external support.

Broadly, SMEs can be classified into two groups: (i) entrepreneurial firms, and (ii) salary-substitute firms. The former emerged as a start-up to implement the innovative ideas of an entrepreneur or to exploit the identified market opportunities whereas the latter came up mainly as a means of employment by taking advantage of government sponsored incentives and sometimes due to the assured market from a large firm. Entrepreneurial firms have produced better innovation performance than salary-substitute firms.

A predominantly large number of SMEs are either a proprietorship concern or a partnership firm and a few are private limited companies. Individual proprietorship firms do not achieve innovation performance as much as partnership or private limited firms.

It is significant to note that SMEs which have achieved better innovation performance have achieved better economic performance in the form of higher growth of sales turnover over a period of time. It is crucial to understand the role of technological innovation in building up the competitiveness of SMEs not just in the domestic market but more importantly with reference to the international market.

Technological innovation promotion Zimbabwean SMEs: Policy imperatives

Considering the above scenario, Zimbabwean policy makers have to face triple challenges with respect to SME innovation promotion. How to inculcate and promote the culture of innovations among SMEs and how to enhance the quality of SME innovations towards radical innovations, how to encourage “patenting culture” among SMEs?

There is no easy solution to overcome these challenges. Concerted efforts have to be made by policy makers towards innovation promotion. Some policy recommendations to overcome the challenges include:

First of all, it is important to recognise that the level of awareness among Zimbabwean SMEs regarding the crucial role of innovation in enhancing their firm level competitiveness, which is low. Therefore, there is an urgent need to spread the awareness through “innovate and succeed” campaign by narrating the achievements of SME innovators located in the respective regions. Regional SME innovators themselves can be involved in presentations.

SME promotion agencies and networks located across Zimbabwe can take the lead in such campaigns, along with regional industry or SME associations.

The need to protect the intellectual property gained in the process (in the form of obtaining patents) must be emphasised. Innovation performance of SMEs strongly depends on the synergies and external linkages in the local environment, which offers insight into the decisive importance of interactions among firms, governments, and research institutes in the innovation process. A key factor for providing efficient support for SME innovations is that it is delivered in an integrated and coherent way with a maximum degree of flexibility.

This requires organisations operating with sufficient autonomy and in a flexible manner for delivering support to innovators such as financial, technical, legal, etc. Innovation policy support is needed to offset the internal technical deficiencies of innovative SMEs by providing “accessible and productive innovation infrastructure” for firms at different stages of their life-cycle.

It is imperative for policy makers to understand the specific needs of the local SMEs, with a focus on clusters. The above proposed measures would largely enable the emergence of “innovation flourishing environment” for the benefit of SMEs in Zimbabwe’s economy.

This has to be achieved as early as possible so that Zimbabwe can take advantage of its vast and growing SME sector not only for employment generation and export promotion but more importantly for giving a new direction to Zimbabwe’s future industrial development through “radical innovations”.

Aleck Ncube is an intellectual property scholar based in Bulawayo. He can be contacted on Mobile: +263712374408, Skype: Matintas1 Twitter: @aleckncube Alternative E-mail: aleckncube@gmail.com among