Innovation, Financial Discipline and Business Performance; A case of small businesses in Arua Municipality.

Abstract

The purpose of the study was to establish the relationship between innovation,financial discipline and business performance of small businesses with a view to establishing a coherent model directed at improving their performance .A responent sample of small businesses within Arua Municipality was used, whose owners /managers were the unit of inquiry.The study adopted cross sectional research design.A questionnaires tool was used and out of 169 questionnaire issued ,145 questionnaires were duly filled and returned representing a response rate of 85.8%.The findings show that there is significant postive relationship between innovation ,financial dicipline and performance of small businesses with (r=.307,p<.01;r=449,p<.01) for innovation and financial discipline respectively. This implies positive changes in performance are associated with positive changes in innovation and financial discipline. Nonetheless, Innovation and financial discipline explains 21.5%(AdjR=.215) of the variations in performance of small businesses.The remaining 78.5 is explained by factors not considered in this study .However,business performance was more reposive to financial dicipline than innovation. The study adopted a multi-theoretic approach in explaining performance of small businesses in Uganda. The study also adopted kline and Rosenrg's 1986 "chain-linked innovation theory in explaining innovation; the CAP reform,2013 model in explaining financial discipline that together help in explaining performance of small businesses .The study has provided a model of innovation, financial discipline and business performance. This model can then be used to provide a trajectory for improving performance of small businesses in Uganda.Policy makers, business experts, owners and managers of small businesses may use these findings to improve performance of small businesses in Uganda since they are great contributors to the Ugandan economy. The study recommends that small businesses owners/managers need to always have a unique package of products to gain competitive edge in the market .Always have a budget for expenditure and stay held to it unless the budget falls short for factors beyond management control;