Exploring Innovation in Developing Countries: The case of the Kenyan renewable energy sector

Start date: 8 October, 2013 End date: 16 November, 2013 Project type: Master's Thesis (prior to 2018) Project code: A25299 Countries: Kenya Institutions: Copenhagen Business School (CBS), Denmark Grant recipient: Cecilia Gregersen and Matthias Trischler Total grant: 33,000 DKK



Following the United Nations’ Rio+20 conference in 2012, a new ‘green growth’ development paradigm has emerged within national and international policy circles and many argue that this green growth agenda is highly relevant in an African context as it provides economic opportunities and growth potential for African economies, without compromising environmental or social aspects. To achieve greener growth in both developed and developing countries, innovation, particularly in renewable energies, is needed. Innovation and entrepreneurship are often seen as important contributions from the private sector to achieve green growth, however, little is known about innovation at firm level in developing countries. From an institutional perspective, this thesis therefore aims to contribute to debates regarding innovation and green growth in developing countries by exploring how the institutional environment influences the way in which enterprises in the Kenyan renewable energy sector engage with innovation and entrepreneurship. To answer this research question, this thesis is conducted following a pragmatic realist approach, and is based on qualitative data gathered through semi-structured interviews with 14 enterprises and 12 institutional actors in the Kenyan renewable energy sector, all of which were conducted during a field study in Nairobi from October to November 2013.

Using an eclectic classification of innovation based on Schumpeter, the findings suggest that enterprises in the Kenyan renewable energy sector engage with various forms of innovation, including process, supply, and market innovation, but predominantly with incremental product innovations. The findings also show that business models play an important role as but also for the commercialisation of innovation in the sector. This thesis identifies three distinct business model characteristics that appear to be relevant among enterprises in the Kenyan renewable energy sector, including customer-centric designing, bundling of products and services, and micro-distributing, all of which suggest that deep customer knowledge and close customer engagement are important facets in the sector. Commercialisation of innovation is found to be closely linked to the process of entrepreneurship through the implementation of these business models. Exploring the influence of the institutional environment on innovation reveals a reciprocal relationship between the institutional context and innovation, which is highlighted particularly with regards to the three business model characteristics. In the end, the insights of this thesis are used and translated into practical implications for both businesses active in the Kenyan renewable energy sector as well as local policy makers and international development practitioners involved in the green growth debate, which framed the problem field of this thesis.