Authors: Ndahani Ng`wasa (Open University of Tanzania) and Henrick Kipangula (Mzumbe University, Tanzania)
Abstract: The study assessed the effect of market innovation on the performance of Small and Medium Enterprises in Tanzania. The study, informed by the Schumpeterian Theory of Innovation, analysed the impact of various facets of market innovation, namely digital marketing, packaging, promotion and advertising, on the performance of SMEs. The study employed a cross-sectional research design as it enables the collection and analysis of data at a single point in time to determine the statistical relationships between variables. The study took place in Dar es Salaam, specifically in the Temeke District, and included a sample of 277 owners and managers of SMEs. Data was gathered via a structured questionnaire and examined through multiple regression analysis to ascertain the degree of influence each independent variable exerted on the dependent variable. To ensure validity, the study used a standardised and previously validated measurement tool. Pilot testing and internal consistency checks of the instrument confirmed the required reliability. The results showed that digital marketing (B=0.238, p=0.000), packaging (B=0.309, p=0.000), promotion (B=0.200, p=0.000) and advertising (B=0.101, p=0.000) all had a positive and significant effect on the performance of SMEs. These findings corroborate the Schumpeterian’s view that innovation propels competitive advantage and economic expansion. The study finds that market innovation improves the performance of SMEs in Tanzania. The study provided several recommendations.