CHAPTER ONE

GENERAL INTRODUCTION

1.1. Background of the Study

Over the last decades, innovation and creativity have become critical skills for achieving success in many enterprises. The need for creative problem solving has arisen as more and more management problems require creative insights in order to find suitable solutions.  As a result, it now becomes something common for enterprises, both large and small enterprises to adopt policies that foster creativity and thereby promote innovation.

Creativity goes hand in hand with innovation and there is no innovation without creativity. Creativity is the driving force behind innovation and the incorporation of looking at things from a different perspective or view.

Innovation and creativity in the workplace have become increasingly important determinants of organizational performance, success, longer-term survival and growth. Creativity and innovation within a well-run company have always been recognized as a sure path to success. Stimulating creativity and exploring completely new and unknown territories which results to increasing the productivity of the organization.

No entrepreneur or enterprise, however successful and big, can continue to hold a place of leadership unless it recognizes that modern business operates in a world of galloping change which creates new problems, risk and opportunities and for which they have to mobilize the enterprise’s resources before changes make their impact felt. To do this successfully, the entrepreneur and enterprise should know where this firm is going to and how the firm will get there. This in turn requires a clear definition of the company’s business which will enable it to continually adapt operations to the realities of the market place, ‘the very corner stone of survival and growth”.

Creative ideas and innovative approaches can come from almost anywhere; from partners, customers, target groups, employees. They can bring you fresh perspectives and ideas. As organizations seek to harness the ideas and suggestions of their employees, it is axiomatic that the process of idea generation and implementation has become a source of distinct competitive advantage (Anderson, De Dreu, & Nijstad, 2004; West, 2002; Zhou & Shalley, 2003). Yet, creativity and innovation are complex, multi-level, and emergent phenomena that pan out over time and that require skilful leadership in order to maximize the benefits of new and improved ways of working.

Enterprises throughout the world are experiencing what can be legitimately described as a revolution: rising energy and material costs, fierce international competition, new technologies, increasing use of automation and computers. All these are major challenges, which demand a positive response from the entrepreneur and management if the enterprise is to survive and prosper. At a time when finance is expensive, the firm’s liquidity is bordering on crisis, the need for creativity, and innovation is more pressing than ever and as competitors fall by the way side, the rewards for successful products and process are greater.

The instigation of new development is the responsibility of the enterprises themselves, which, through experience, are aware of the difficulties created when undertaking innovative investments in a period of great uncertainty. Innovation calls for special entrepreneurial and management skills, the cooperation of a committed workforce, finance and a climate which will create the optimum overall conditions to encourage success.

1.2. Statement of the Problem

The world has become increasingly competitive due to advancement in technology, thus, for a company not to get left behind, as far as performance and competition are concerned, she must engage in creative and innovative ideas to be able to stand in the midst of these challenges. The tendency of owners and managers to engage in and support new ideas, novelty, experience and creative processes, results in new products, services or technological processes which has a great influence on the performance of an enterprise.

SMEs in Mezam has not frequently applied the concept of innovation in their businesses. This is mainly because of:

• Insufficient fiancés, leading to limited resources, time and equipment,
• Equally there are less new products in the market,
• less adoption of marketing innovation strategies,
• Poor business innovation processes. As a result, these enterprises may not likely experience growing sales volume which in turn means poor performance.

The market is full of old and previously existing products which the consumers already have knowledge about them quality.

Low Employees Commitment. This is because of ineffective leadership. Employees look to their managers for direction in the workplace. Good communication that starts from the top down motivates staff members to be more productive and innovative.

If the communication between the managers and the subordinate in an organization is not effective, the financial performance of the credit union will be affected.

Due to the above limitations, the effects of organisational innovation on the growth of small and medium size enterprises in Mezam need to be examine.

1.3 Research Questions

1.3.1. Main Research Question

How does organizational innovation affect the growth of small and medium size Enterprises in Mezam?

1.3.2 Specific Research Questions

• How does the development of new products and services affect the growth of small and medium size enterprises?
• How does the modification of existing products and services affect the growth of small and medium size enterprises?
• How does the new methods of operations affect the growth of small and medium size enterprises?

1.4 Research Objectives

1.4.1 Main Research Objectives

To find out how organizational innovation affect the growth of small and medium size Enterprises.

1.4.2 Specific Research Objectives.

• To find out how the development of new products and services affect the growth of small and medium size enterprises.
• To find out how the modification of existing products and services affect the growth of sales in small and medium size enterprises.
• To find out how the new methods of operations affect the growth of small and medium size enterprises.