Innovation among Small-Scale Firms in Shea Butter Production in Ghana

Abstract

This study examines innovation among small-scale shea butter processors in Ghana, guided by Schumpeter's Innovation theory. Using a descriptive research design, the study investigates product innovation, process innovation, marketing innovation, and organizational innovation. Data was collected through a questionnaire administered to 181 firms selected from a comprehensive list of shea butter processors, drawing inspiration from the European Community Innovation Survey (2019). Regression analyses using Stata version 14.2 were employed to identify factors influencing innovation. The findings show the presence of all four types of innovation, with different driving forces behind each. Logistic regression analysis identified access to innovation support services, firm location, and firm size as key determinants of product and process innovation. For organizational innovation, the study yielded a Pseudo R-squared of 0.157, a Chi-square value of 37.036, and an average innovation score of 0.771. Location, product demand, and foreign training for managers emerged as statistically significant factors. Urban firms displayed a higher propensity for both organizational and marketing innovation. Firms in urban settings were over three times more likely to innovate in marketing than rural firms (odds ratio: 3.377). A larger product portfolio was also associated with increased marketing innovation. Younger firms tended to innovate in products and processes (odds ratio: 9.137). The study concludes that firm size positively correlates with product innovation adoption, supporting Schumpeter's theory. However, regional constraints may necessitate a greater focus on process innovation, particularly efficiency improvements and waste reduction strategies. Interestingly, managerial demographics (age and education) did not significantly influence innovation, suggesting that regional entrepreneurial spirit and necessity-driven innovation may be more important factors in this context. The unique geographical and resource context of the region presents both challenges (limited infrastructure, financial resources, and research institutions) and opportunities (proximity to raw materials, potential for community collaboration) for innovation in the shea butter industry. Based on these findings, the study recommends that the government and relevant stakeholders provide support mechanisms such as training programs, access to technology, mentorship, and funding to enhance product innovation capabilities in the shea industry. These interventions should consider the regional context and focus on leveraging local resources while addressing specific constraints faced by firms in different locations.