Effects of Product Innovation on the Performance of Women-led Micro and Small Enterprises in the Food Processing Industry, Tanzania

Abstract

Product innovation is an important factor for the performance of enterprises. Based on Schumpeter’s New Combination theory, this paper analyzes the impact of product innovation on the performance of Micro and Small Enterprises (MSEs) in the food processing industry, specifically, those led by women. The study utilized a cross-sectional design and employed stratified random sampling, whereby a total of 297 women entrepreneurs from Dar es Salaam, Arusha, Morogoro, and Dodoma regions participated by completing a structured questionnaire. Additionally, seven (7) women owners of businesses from each of the involved regions were selected through purposive sampling for Focus Group Discussions (FGDs) and one SIDO officer for a structured interview. The collected data were analyzed using the Smart PLS Version 3 Software, employing Structural equation modeling (SEM) for measurement purposes. The PLS Algorithm was employed to establish the reliability and validity of the data through a measurement model. Subsequently, the Bootstrap method was utilized in the structural model to assess the relationship between product innovation and the performance of women-led MSEs. The results showed a significant positive effect between product innovation and the performance of food processing women-led MSEs (t=4.261, p=0.000). Furthermore, the study revealed a significant mediating effect of innovative performance between product innovation and women-led food processing MSEs (t=1.981, p=0.006). In conclusion, the study highlights that product innovation enhances the performance of women-led food processing MSEs. This contributes to the theoretical understanding of product innovation and women-led MSEs in the food processing industry, while also providing empirical evidence to support the promotion of product innovation by the government agencies responsible for managing women's businesses, with a view to
improving their performance.