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This study sought to examine the role of innovation strategy on performance of SMEs in Kenya. The study applied Innovation theory. The population of the study was manufacturing SMEs in Nairobi City County, Kenya since Nairobi is a cosmopolitan that is home to several manufacturing SMEs. The target population comprised 538 manufacturing SMEs located in Nairobi City County, Kenya. The study focused on top managers as they primarily handle strategic management issues within organizations. Stratified sampling was employed to select the sample, with the population stratified based on sectors as categorized by the Kenya Manufacturers Association (KMA). The research was underpinned by the positivism philosophy, aiming for an objective understanding of the relationship between innovation strategy implementation and the competitive performance of manufacturing SMEs in Kenya. A cross-sectional survey design was utilized to achieve this objective, integrating both qualitative and quantitative mixed methods. Data collection was carried out through the administration of a questionnaire, following a pilot study to ensure the validity and reliability of the research instruments. The Statistical Package for Social Sciences (SPSS) version 25 software was utilized for data analysis. Qualitative data was subjected to thematic analysis and presented in prose form, while quantitative data underwent descriptive statistical analysis and was presented using tables and figures. The study also computed correlation and regression analysis to test the relationship between study variables and test the research hypothesis. The study also concludes that innovation strategy has a positive and significant effect on the performance of manufacturing SMEs in Kenya. The study revealed that new products, new markets, and product development influence the performance of manufacturing SMEs in Kenya. This implies that improving innovation strategy (new products, new markets, and product development) would improve manufacturing SMEs' performance in Kenya. This study, therefore, recommends that the management of manufacturing SMEs in Kenya should promote an innovative work environment
Masoud et al. (Thu,) studied this question.