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VOL. 7, ISSUE 2 (2025)
Analyzing the relationship between innovation and productivity: A case study of Kenya’s manufacturing sector
Authors
David Murunga Musimbi, James Murunga
Abstract
Innovation is recognized as an important driver of productivity and
economic growth, yet its dynamics within developing countries remain
underexplored, especially in the context of the manufacturing sector. The
manufacturing sector is important in achieving the Kenya’s Vision 2030 that
seeks to transform Kenya into a middle income country. However, the sector’s
growth has remained low at about 7 percent of GDP. The government and other
industry stakeholders are actively seeking to raise the sector’s share in the
GDP by setting goals for example increasing it from 7.6 percent to 15 percent
by 2027.One of the factors that may lead to such impressive growth is
innovation by the firms in the manufacturing sector. The role of innovation in
the performance of the firms in the manufacturing sector is underexplored in
Kenya. This study therefore investigates the relationship between innovation
and firm level productivity in Kenya’s manufacturing sector. The study uses the
micro, small and medium enterprise survey data. On using Propensity score
matching, the study finding show that manufacturing firms that innovate on
average realize KES 6 million more than their non-innovating counterparts. The
study therefore recommends the implementation of policies that promote innovation
adoption among manufacturing firms so as to boost productivity and foster
industrial growth in Kenya.
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Pages:129-134
How to cite this article:
David Murunga Musimbi, James Murunga "Analyzing the relationship between innovation and productivity: A case study of Kenya’s manufacturing sector". International Journal of Management and Economics, Vol 7, Issue 2, 2025, Pages 129-134
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