FUW-INTERNATIONAL JOURNAL OF MANAGEMENT AND SOCIAL

SCIENCES.
Volume. 7, No. 2, December, 2022, ISSN: 2384-6224

ASSESSMENT OF BARRIERS TO ENTREPRENEURIAL INNOVATION IN SOME

SELECTED SMES IN BAUCHI METROPOLIS OF BAUCHI STATE.

Hassan Nuruddeen Mohammed

Department of Business Administration
Faculty of Management Sciences
Federal University of Kashere, Gombe, Gombe State.
Email: hassannuruddeen958@gmail.com

&

Yahuza Shehu
Department of Vocational and Technical Education
Faculty of Technology Education,
Abubakar Tafawa Balewa University Bauchi, Bauchi State.
Email: yahuzashehu4@gmail.com

Abstract
Globalization has threatened our local SMEs through competition influenced by innovation
However, our local SMEs were constrained by barriers to innovation to face global business
dynamics. This research aims to identify the level of exogeneous variers on SMEs innovation
(NPD). To achieve this, a survey design was conducted in some selected registered SMEs under
Bauchi Ministry of Commerce. A total sample size 172 was drawn from the population of 302
with the help of Taro-Yamani’s formula. Simple random sampling was used to choose the sample.
Questionnaire was used as the research instrument, which was administered to 172 while 132 were
filled and returned by the respondents. Data collected was subjected to descriptive statistic of mean
and mode, to ascertain the barriers to SMEs innovation while non-parametric Kruskal-wallis test
of significant difference was used to ascertain significant difference between the barriers to SMEs
innovation. The result revealed that all the factors (High Cost, Market Factor, Government Policies
and regulations and economic factors) were barriers to SMEs innovation, and significant test
revealed no difference between the barriers. The researcher therefore, recommended that;
Government should encourage SMEs owners/managers in using our local content and technology
to cut cost, collaboration be enhanced between research institutes and our local SMES for
knowledge sharing. Government expenditures be geared towards buying our local innovation and
market be established for showcasing new products, and encourage citizens to patronize.
Keywords: Barriers, Entrepreneur, Innovation.

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1.0 Introduction
In the past, firms operated within a confined environment, especially in developing countries.
However, the current globalization of markets has endangered firms operating within relatively
protected environment and cannot devoid global competition and dynamics in the demand and
want of potential and existing customers. Innovative SMEs are the only business that can
successfully withstand the turbulent of business dynamics (Dakung, Danladi and Maklu, 2014).
Innovation is reported as strategy for the survival and sustainability of SMEs (Tulu 2011) cited in
Nassar and Faloye, 2015). Telegeta (2014) opined that flawed SMEs are those who their chances
of survival are seriously threatened by inability to renew their products and marketing processes.
Hence, Schumpeter (1934) explain that, business innovation is the ability of business
owners/managers to introduce new products, new method of production, new way of marketing
product, new source of supply and new way of organizing business. Innovation, therefore is any
new development in firm that is geared to meet new market demand.
The importance of innovation as driver for the long-term success and sustainability of SMEs is
believed and limited with some barriers. Corderio and Vieira (2012) hold that, barriers to
innovation focuses on problems encountered at different stages of innovation, more often by lack
of finance, technological know-how, poor information, high cost of production, government
policies and regulations etc.
The survival and sustainability of SMEs depend largely on their innovative capability. Hence the
identification and measuring the impact differences of barriers to innovation would serves as a
way of reducing the barriers and innovation facilitators (Corderio and Vieira 2012).
This work aimed to identify external/exogenous barriers to new product development in selected
SMEs under the trade of metal and fabrication in Bauchi Metropolis. And to the best knowledge
of the researcher, it’s the first of its kind in Bauchi Metropolis.
However, there is no research without a problem, this research is surrounded by problem caused
by business activities that cross national boundaries which significantly impact our local SMEs
through added innovation competition. Such competition has threatened the survival and
sustainability of our local SMEs. This forces SMEs owners’/managers to strive and strategies their
business through innovation (New product development) in order to compete with the imported
products. In addition to this, Global innovation index report (2020) ranked Nigeria 115 out of 118
countries in (2018), 105 out of 114 in (2019) and 121 out of 117 countries in (2020) in terms of
innovation output. This clearly explains the need to assess barriers to SMEs innovation and proffer
solution that would enhance our local SMEs innovation to compete with the wider global market.
The research has the objective of identifying and assessing the differences of exogeneous barriers
to SMEs innovation in Bauchi Metropolis.
Research Questions
i. What are the exogenous factors inhibiting SMEs innovation (New Product
Development) in Bauchi Metropolis?

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ii. What are the level/degree of significant difference between exogenous barriers on
SMEs innovation (NPD).
In view of the research questions, the objective of the research is:
To assess the level of significant difference of exogenous barriers on SMEs Innovation (NPD).
The research has the (Ho) null hypothesis as:
There is no significant difference between exogenous barriers on SME’s Innovation (NPD).
2.0 Literature Review
Schumpeter (1934) called entrepreneur as an agent of creative destruction who constantly causing
imbalance in the market, resulted from ability to introduce business innovation that gives him
competitive edge over his rivals and gain large market shares.
Entrepreneur is a man with no boundaries, catalyst of change that is instrumental in discovering
new opportunities. Hence, he is an innovative thinker and promoter, who is able to identify market
opportunity for a new product, new methods of production new way of marketing products, new
source of supply and new way of organizing business. These were referred by Schumpeter (1951)
as business innovation. Studying innovation which is of great importance to the owners/managers
of SMEs, also is the barriers to innovation (Duarte, Madeira, Moura, Carvalho & Morien, 2017).
Innovation barriers refers to factors hindering innovation and which decrease the innovative
activity of firms (Butryumova, Karpycheva and Kasyanova, 2015). Innovation barriers may
occurred at different stages of innovation, right from the stage of idea generation, implementation
and commercialization of the innovation.
Piatier (1984) and Hadsimonalis (1999) reported that, barrier to innovation may either be
indigenous or exogenous. Indigenous barriers to innovation are barriers born within the
organization that hindered innovation. These include among others; inadequate skilled human
resources, lack of funds within the organization, employees’ attitude towards innovation, lack of
will by managers etc., on the other hand, exogenous barriers are barriers that comes outside the
organization, such as; Government regulatory policy, high interest rates, lack of external long-term
loan for innovation, lack of collaboration etc., (Nassar and Faloye, 2015). Cordeiro and Vierra
(2012) opined that, the study of innovation barriers is crucial and critical for the survival and
sustainability of SMEs. Small scale enterprises are prone to high risk and high cost in lunching
innovative products (Brutryumova et al, 2015). Therefore, in order SMEs to improve their
innovation activities Brutryumova et al., (2015) restated that managers/SMEs owners need to
analyse obstacles to their innovation and government to improve rules and institutions to reduce
the obstacles.
2.1 Empirical Review
Several studies were conducted that aimed to identify barriers to innovation in different parts of
the world, the work of some researchers revealed varying results that account what constitutes
barriers to innovation in their areas/locality. Among are:

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Randish and Stephen (2007) conducted research on barriers to SMEs innovation. Paper presented
at the European Union Commission at joint research found that, the most common external barrier
to innovation are: financing issue, difficulty in in finding suitable qualified personnel and lack of
collaboration.
Research conducted by Nasar and Faloye in Southern Part of Nigeria in (2015) on barriers to SMEs
innovation in developing country, using stratified random sampling on 966 SMEs through
descriptive statistical analysis found that, lack of finance, lack of clear technology resistance to
change antitrust measures are barriers to innovation.
A research conducted in Adis Ababa, Ethiopia in 2014 on barriers to innovation using survey of
403 SMEs by Telegeta found that, the most significant barriers to SMEs innovation were lack of
market and technological information using correlation analysis.
Zhu, witmann and Peng (2011) in their research tittle institutional based barriers to SMEs
innovation in China, found that the most significant barriers to innovation is Government policy
and regulation. By the used of survey on 123 SMEs and using descriptive statistics of percentage
and frequencies.
Research carried out by Demibas in Turkey 2011 on perceived barriers to innovation lack of skilled
personnel, high cost of innovation were significantly barriers, through administering questionnaire
to 275 SMEs and analysis were conducted using multiple logistic regression analysis.
3.0 Methodology
This study employed descriptive and inferential analytical survey design which was conducted in
Bauchi Metropolis as an area of the study with high concentration of registered SMEs under
Bauchi State Ministry of Commerce. A sample size of 172 was determined from the population of
302 through Taro-Yamani’s Formula. Simple Random Sampling was used to draw the sample.
Questionnaire was administered to 172 SMEs owners/managers. A total of 132 questionnaire were
filled and returned, which constitute 76.7% of the total questionnaires distributed. Data collected
was subjected to Descriptive statistical analysis of mean and modes, adopted from (Nassar and
Foloye, 2015). (Zhu et al., 2011). Further inferential statistical analysis was used of non-parametric
analysis known as Kruskall-wallis test of significant difference, as a counterpart of analysis of
variance (ANOVA) due to non-normality of the Data. In order to test significant difference
between barriers to innovation (NPD).

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4.0 Data Presentation and Analysis

Table (1): Response of SMEs owners/Managers on Barrier to Innovation (NPD)
FACTORS SA A M SD D N Mean Mode
Cost Factor Cost of Raw-materials is too high 32 39 20 17 24 132 3.23 4
Excessive risk involved 35 41 4 33 19 3.30 4
High interest rate 42 58 1 21 10 3.77 4
Cost of technology is too high. 25 32 6 36 28 2.96 3
Long term loan attract additional interest 17 19 15 49 32 2.55 2
Average Mean 3.17
Market Factor Uncertain Demand for Innovation (NPD) 59 52 3 10 8 4.09 5
Lack of market information 30 58 10 18 16 3.58 4
Market dominated by established SMEs 79 49 2 0 2 4.54 5
Easy imitated by others 35 48 7 40 2 3.28 4
pay off period is long 15 37 0 65 15 3.52 2
Average Mean 3.80
Government Policies Lack of patent/copy right enforcement 6 48 21 80 30 132 2.75 2
and Regulations Factor
Lack of government supports 45 8 9 10 60 2.67 5
Lack of collaboration by government institutions of 10 19 8 50 45 3.02 2
learning
High tax on SMEs 30 40 5 8 4 2.64 4
High Standard enforced on innovation. 22 9 16 50 25 3.03 2
Average Mean 3.03
Economic Factors No need to innovate due to earlier innovation in the 50 65 2 8 7 4.08 4
market.
Lack of competence hand in area to handle innovation 69 52 0 7 4 4.27 5
Lower price are charged by established firms 4 15 8 58 47 2.02 2
Loan for innovation purpose is not guarantee by Banks 54 55 4 12 7 4.04 4

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Import of innovation technology is too hash for SMEs. 8 17 17 47 48 2.04 2

Average Mean 3.33
Source: Field Survey, 2022.

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Average means of 3.00 is considered as Barrier to Innovation, Mode of 5 – 4 is considered as main

barrier in items while Mode of 3 – 2 is least barrier in the items.
Table (1) showed the level of how SMEs owners/managers consider the factors that constitutes
barriers to their Innovation (NPD). Cost factor is considered as barrier to new product development
with an Average mean of (3.17). items 1, 2, 3 has Mode of (4) respectively, indicating the most
inhibiting factors constraining SMEs owners/managers innovation activities.
Market factor is reported to have an average mean of (3.80) this shows Market is considered as
barrier to innovation activities among SMEs owners/managers, to further point out the end point.
Item 1, 2, 3 and 4 were considered the most factors inhibiting innovation with mode of 5 & 4
respectively.
Government policies and regulation, item 2 and 4 where considered the most inhibiting factors to
innovation with regards to policies and regulations made by government. However, the final
average mean is (3.03). this indicates that, Government policy and regulation is a barrier to SMEs
innovation (NPD).
Economic Factors: The descriptive Statistics shows that, the average mean (3.33) which is within
the range is considered as barriers to innovation among SMEs owners, items 1, 2 and 4 have mode
of 4, 5 and 4 which shows that, they are the most inhibiting factors constrained innovation (NPD).

Table (2): Kruskal-Wallis H Test for Significant difference between external barriers to
SMEs innovation.
𝟐
∑ 𝑹𝟐 𝑲−𝟏 H ∝𝟐 ∱ P
ni Ni df 2 Tailed
20 4 583.2 3 3.751 0.05 7.815 0.08
500
245
1008.2

Table (2) above revealed the result of Kruskal-Wallis of non-parametric test of significant
difference between external barriers (Cost, Market, Government Policies/Regulation and
Economic) to SMEs innovation (New Product Development).
The hypothesis (Ho) is stated as: There is no significant difference between external barriers to
SMEs innovation in Bauchi Metropolis. The hypothesis was tested at 0.05% ∝ level of
significance.
The descriptive statistics so far, showed that both the independents variables were considered to
be a barrier to innovation. However, slight differences exist between the independent variables.
Cost/market (3.17 – 3.80 = 0.63) cost and Government Policy (3.17 – 3.03 = 0.14), cost and
Economic (3.17 – 3.33 = 0.16), Market and Government Policy (3.80 – 3.17 = 0.63), Market and

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Economic Factors (3.80 – 3.33 = 0.47) and Government Policy and Economic Factor (3.03 – 3.33
= 0.3). this is in contrary to the null hypothesis which says there is no significant difference. The
inferential test of significant difference showed from the table (2) revealed that, H cal (3.751) <
2
∱ (7.815) (k-1) or (4-1) = 3 degrees of freedom at 0.05% and P (0.08) > (0.05). this suggest that,
we fail to reject null hypothesis which states that. There is no significant differences between
external barriers to SMEs Innovation (NPD) in Bauchi Metropolis.
4.1 Discussion of Findings
This research work has evaluated factors that constitutes external barriers to innovation (NPD) and
also assessed difference between the barriers. The result revealed that; High cost of raw materials
and technology hindered innovation (NPD). Market competition which comprises, domination of
market by established firms, demand for new products is uncertain were among barriers to SMEs
innovation (NPD), lack of protection and enforcement against imitators by government set back
innovation (NPD). Lack of collaboration and share knowledge leashed innovation these are some
of the points that are attributed to government policies that hindered SMEs innovation in (NPD).
Furthermore, economic factors such as price competition, lack of competent labour force and loan
from banks were among economic factors that hindered innovation. The high cost as barrier to
innovation agreed with the finding of (Nassar and Faloye, 2015) (Demibas 2011). Market as barrier
to innovation was found to agree with the finding of (Telegeta, 2014) & (Demibas, 2011).
Government policies as barriers to innovation was supported by finding of Zhu, et al., (2011).
Economic factors such as competition and dynamics of technology as barriers is in consonance
with the finding of (Randish and Stephen, 2007).
5.0 Conclusion and Recommendation
This paper suggest that, the most exogenous/external barriers to SMEs innovation in Bauchi
Metropolis were among others: High cost associated with inputs, market competition dominated
by established firm’s inadequate patent/copy right protection and economic activities such as lack
of competent labour force to handle the dynamics of innovation, were barriers that leashed
innovation. Therefore, the researcher has this to recommend in order to unleashed innovation
activities in Bauchi Metropolis.
- Government should encourage SMEs owners/managers in using our local content and
technology to cut cost of innovation (NPD).
- Collaboration be enhanced between research institutes and our local SMEs for knowledge
sharing.
- Information be enhanced and disseminated, in respect of new knowledge and market
opportunities for our local SMEs.
- Government policies be reviewed in order to encourage innovation and at the same time
provide adequate outfits to protect innovators against imitators.
- Market challenges can be addressed, through ensuring all Government expenditures are
geared to buying our new local innovations and market be established purposely for
showcasing our local innovations and citizens be encouraged to buy, for the development
of our economy.

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