Determinants of Innovation performance among informal firms: empirical evidence from Nigeria

Abstract

This study examined the influence of age, owner's education level, and skill development activities (SDAs) on the innovative performance (IP) of 1,947 informal firms in Nigeria. Employing descriptive analysis and binary logistic regression, we assessed innovation patterns across the four activities and the probabilities of SDAs, age of business and education levels of business owners influencing both product and process innovation. Descriptive analysis reveal that metal fabrication and leather works exhibit robust innovation activities, with over 30% of businesses introducing new products and enhancing existing ones. Phone repairs demonstrate moderate engagement, emphasising service-oriented process improvements, while Shea butter production lags significantly in IP. Regression analysis reveals that SDAs significantly contribute to a higher likelihood to both types of innovation. Interestingly, the age of informal businesses did not emerge as a decisive factor in their IP. However, higher education levels among business owners were identified as positive influencers of innovation, with tertiary education showing the most significant impact. The study underscores the need for targeted policy interventions among informal firms to address resource limitations.