The Effect of Innovation on Smes Performance in Maiduguri Metropolitan Council by Asisatolabisihassan 19/07/03/015 a Project Submitted to the Department Ofbusiness Administration,faculty of Management Science,university of Maiduguri,inpartialfulfillmentof

In Nigeria, SMEs contribute significantly to economic growth by creating employment opportunities and fostering economic stability, especialy in urban centers like Maiduguri. The Central Bank of Nigeria typically defnes SMEs based on asset base and number of employees, with criteria varying across industries and sectors(CBN,2018). SMEs as Innovation Hubs: SMEs are increasingly recognized as hubs of innovation due to their flexibility, adaptability, and close connections with local markets.In Maiduguri,where larger corporations may be scarce, SMEs play a critical role in introducing new products,processes,and business models tailored to local needs.This adaptability allows them to meet unique demands and respond to shifts in consumer behavior (OECD,2019).Labor-Intensive Nature of SMEs:SMEs are generally labor- intensive businesses,meaning they rely heavily on human capital rather than large-scale automation or machinery.In Maiduguri,this characteristic means SMEs can provide employment to a wide range of individuals,including those with limited technical skills or formal education. However,this also means that SMEs may face constraints in scaling operations due to limited technological resources (Aremu&Adeyemi,2011). Financial Structure of SMEs:SMEs often operate with a limited financial base,relying primarily on personal savings,small loans,or informal sources of funding.In Maiduguri,access to formal credit for SMEs may be restricted due to high-interest rates,lack of collateral,and other barriers within the financial system.This limited financial structure can restrict their capacity for innovation,as they may struggle to invest in new technologies or expand their operational capabilities (Beck & Demirgüc-Kunt,2006). Innovation is increasingly recognized as a critical driver for enhancing the performance and competitiveness of SMEs.Innovation,which can take various forms such as product innovation,process innovation,and organizational innovation,involves the implementation of new or significantly improved products, processes,or practices within a business (Schumpeter, 1934).The ability to innovate allows SMEs to adapt to changing market conditions,improve efficiency, reduce costs,and meet customer demands more effectively. Thus, innovation is not merely a survival tool but a growth strategy for SMEs.In the context of Maiduguri Metropolis, the impact of innovation on SME performance is particularly pertinent.This region has faced significant economic disruptions due to insurgency and other socio-economic challenges. Despite these adversities,many SMEs continue to operate and even thrive by leveraging innovative practices.For example,some businesses have adopted digital platforms to reach a broader customer base,while others have implemented new production techniques to enhance productivity.These innovative efforts have helped SMEs in Maiduguri to remain resilient and competitive.Research indicates that SMEs that embrace innovation tend to outperform those that do not.Studies by the Organisation for Economic Co-operation and Development (OECD,2017) reveal that innovative SMEs experience higher revenue growth,better market penetration,and greater overall performance. However,the specific impact of different types of innovation on SMEs in Maiduguri has not been extensively studied. Understanding this relationship can provide valuable insights for both business owners and policymakers to foster a more conducive environment for innovation. The role of innovation in enhancing SME performance has been extensively studied in various contexts.Research indicates that SMEs that adopt innovative practices tend to outperform those that do not,achieving higher levels of productivity,efficiency,and market share. In Maiduguri,the adoption of innovation can help SMEs to better navigate the complex and often volatile market conditions,enabling them to develop unique value propositions and improve their operational processes (Gunday et al.,2011). This study aims to explore the specific impact of innovation on the performance of SMEs in Maiduguri, providing insights into the types of innovation that are most effective in this context.Despite the recognized importance of innovation,many SMEs in Maiduguri have not fully embraced innovative practices. Factors such as limited access to information,lack of awareness,and financial constraints often impede their ability to innovate.Moreover,the unique socio-economic and security challenges in Maiduguri present additional barriers to innovation.Addressing these issues requires a comprehensive understanding of how different forms of innovation can influence SME performance in this region.This study seeks to fill this gap by examining the relationship between innovation and SME performance in Maiduguri,focusing on product,process,and organizational innovations (Baldwin &Sabourin, 2002). Innovation in SMEs can take various forms,including product innovation,which involves the development of new or significantly improved goods and services;process innovation,which entails the implementation of new or improved production and delivery methods;and organizational innovation,which encompasses changes in business practices, workplace organization,and external relations (Schumpeter,1934).Each type of innovation has the potential to drive significant improvements in SME performance by enhancing efficiency, reducing costs,and increasing customer satisfaction.Understanding the specific impacts of these innovations in the context of Maiduguri's SMEs is crucial for developing effective strategies to foster innovation. Theoretical frameworks such as Schumpeterian theory and the Resource- Based View(RBV)provide valuable insights into the role of innovation in SME performance. Schumpeter's theory emphasizes the importance of entrepreneurial innovation in driving economic development,while the RBV highlights the strategic importance of leveraging unique resources and capabilities to gain a competitive advantage(Camisón &Villar- López,2014). These theories underpin the analysis of innovation's impact on SME performance in Maiduguri, offering a robust foundation for exploring how different types of innovation contribute to business success.