Business model innovation and performance of micro, small, and medium-sized enterprises in Nakawa division, Kampala capital city authority

Abstract

Due to evolving business models in the digital economy, how value is provided is also changing quickly. This study focused on investigating the effect of business model innovation on the performance of MSMEs. It was guided by three specific objectives that included; (i) to examine the effect of value proposition on performance, to assess the effect of value creation on performance, and to establish the effect of e-business on the performance of MSMEs. The study adopted a cross-sectional survey design and applied both qualitative and quantitative approaches. Data was gathered from a sample of 130 respondents. Both questionnaire and interview methods were used to gather data from the specified respondents. In order to address the study objectives, quantitative data was analysed using regression analysis to establish how business model innovation affects the performance of MSMEs. In the process, the contribution of value proposition, value creation, and e-business on performance was established. The findings revealed that value proposition, value creation, and e-business all had a significant positive effect on the performance of MSMEs. The study, therefore, concluded that business model innovations play a vital role in driving MSMEs' performance. As a result, the study recommends managers and owners to actively manage, update and continuously monitor their business models, business models should be examined and updated in light of recent market and technology developments, MSMEs should also prioritize stakeholders' interests and determine how to strike a balance between their requirements and expectations when defining the value proposition. And MSMEs should consider the creation of value at cost-effective pricing. Owners and managers of these firms need to generate value at market-competitive pricing. Lastly, the study recommends management adopt e-business innovations such as online marketing to improve service delivery and that there should be space for feedback from customers to know where they did not do well, as it will help the organization be more effective.