Innovation and Barriers to Innovation: Small and Medium Enterprises in Addis Ababa

With increasing competition and quickly spreading of knowledge, the future of many businesses depend upon their ability to innovate. However, empirical and environmental scan evidence shows that low technological innovativeness of small and Medium Enterprises (SMEs) in Addis Ababa. Thus, this study examines barriers for technological innovation in SMEs. The data for the study was collected from four selected sub cities of Addis Ababa SMEs (Akaki, Bole, Kirkos and Yeka). The questionnaires were distributed randomly for 207 SME managers and/or owners to gather the needed information. The data gathered from managers or owners' using ordinary scale was analyzed quantitatively. On the other hand, interview data from official of sub cities was analyzed qualitatively. The mean, mode, percentage, and correlation analyses were used to process variables and data analysis. The result of this study indicates that the major barriers of introducing or expanding technological innovation for the sampled SMEs are: lack of government policy and regulation, lack of technological and market information, inadequate research and development, high cost of innovation, organizational culture, size of enterprise, lack of skilled personnel, lack of finance and absence of cooperation. In addition, the comparative analysis indicate that, except government policy and regulation, organizational culture, size of enterprise and lack of skilled personnel, all other factors were considered to be an important barrier to industry level and both for Small and Medium Enterprises. Similarly, all factors have statistically significant relationship for Industry, Small and Medium specific, except lack of cooperation, it is statistically insignificant for SME's specific technological innovation. Key Words: Innovation, Barrier to Innovation, SMEs, Addis Ababa