Current research and theory development in innovation have mainly built on advanced economies in western countries. As a result conceptual and theoretical issues emerge, such as the unclear definition and complicated measurement of innovation in developing countries.
In this chapter, a three innovation cases in manufacturing smes are presented and analyzed, addressing three research questions: what and how do innovations materialize within manufacturing smes? What are the firms’ strong and weak internal capabilities? How does the external business and institutional context play a supporting or hampering role in the innovation process? The research involved a qualitative (inductive) approach to capture the realities on the ground. Data for developing cases we obtained via holistic ‘semi-structured’ interviews with SME owners and managers.
The cases include a palm oil company in Ghana initially manufacturing products for the local market. The company, then successfully accessed the export market, along with the introduction of several new products and new production processes. The second case, a furniture company in Tanzania, changed from trading wood into manufacturing, which would qualify as functional innovation. This enabled the company to introduce new products and gradually new technology. The third case, a Kenyan textile company, started as a briefcase company, then established a production line with new machines and new design.
The cases show that innovation in African manufacturing smes often manifests itself differently, not necessarily via high profile technological and radical ‘new to the world’ breakthroughs involving explicit R&D investments and patents. Innovation often concerns incremental adoption and adaptation or new combinations of existing technologies. Most owners and managers are well informed about the technology possibilities and alternatives for their manufacturing through suppliers of machinery and equipment.
All owners of the cases indicate that the business environment in their respective country is challenging. They all see promising market opportunities on the one hand but a harsh institutional context on the other, which makes business operations, innovation and development problematic. Interaction with existing technology institutions, as formal innovation system actors, is virtually non-existent. Many smes indicate that they would like to cooperate with universities to undertake research at their premises, sharing the research insights obtained.
The innovations observed in the cases are the product of experiential learning and a process of doing, using and interacting (dui) in an informal way. Learning by doing and interaction with suppliers, clients and informal networks, and experiential and social learning more useful for building a broader understanding of innovation systems in developing countries. Finally yet importantly is the importance of a hostile and unfriendly government, as it is often engaged in bribery and corruption. Despite their good intentions in formulating innovation policies written by government agencies, the entrepreneurs prefer to keep the government at a distance. Instead, many enterprises are supported in their innovation activities by less visible or less commonly known informal institutional links.