Micro enterprises are faced with the daunting task of having to survive after being established by individuals who may know little or nothing about planning in a formal way. These firms face challenges due to the limited planning knowledge and the pressure for quick profitability by those who establish them. This paper explores how financial innovation affects survival of micro-enterprises within an intensively competitive environment and declining profit margins. A case study approach was initially used focusing on five micro-enterprises within Kampala City selected from the five divisions of the City. However, after analyzing the collected data, a cross-sectional design was found appropriate and accordingly adopted. Key findings reveal that micro-enterprises succeed through product variation, efficient supply chain management, competitive pricing for standard products, and premium pricing for nonstandard products. These strategies enable them to stay relevant and profitable amidst intense competition and declining profit margins. The findings from the study indicate that there is a significant relationship between product innovation, cost saving innovation and survival of micro enterprises. However, it is only product innovation that has a significant effect on micro enterprise survival. Qualitative results of the study also indicate that micro enterprises operate within a largely unregulated environment. The results of the study have significant value to practitioners especially the policy makers who should take an interest in generating policies that support the survival of micro enterprises, given the critical contribution they make to the economy.
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