Establishing an understanding of the innovation process of informal micro-enterprises

Abstract

Innovation has been discerned as a catalyst that enables firms to remain relevant and sustainable. In recent years, the innovation discipline has been extended to the informal sector. Nonetheless, to date little is known about the process that is followed by informal micro-enterprises to execute innovation activity in each innovation phase. Thus, this study sought to establish an understanding of the process that is followed by informal micro-enterprises to execute innovation activity in each innovation phase. The study adopted a mixed-methods research design to sequentially collect and analyze quantitative and qualitative data from informal micro-enterprises that are based in the townships of the Gauteng province. The study revealed that credible customer assemblies are used to acquire knowledge and information necessary to execute innovation activity and to test innovations before they are launched in the market. Moreover, while informal micro-enterprises mostly use internal resources to transform innovative ideas into innovations, coopetition relationships aid to foster open innovation and limit the strain on internal resources. The findings suggest that informal micro-enterprises innovate differently from formal small businesses and there is a need for researchers and the government to introduce policies and initiatives to enhance open innovation in the informal sector.