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African Journal of Agricultural Marketing ISSN 2375-1061 Vol. 8 (3), pp. 001-014, March, 2020. Available online at 
www.internationalscholarsjournals.org © International Scholars Journals 

 

Author(s) retain the copyright of this article. 
 
 

 

Full Length Research Paper 

 

Assessing the innovative nature of the agricultural 

based small businesses in Rwanda - The case 

study of the coffee industry 

 
A. J. Antonites* and J. J. Haguma 

 
Department of Business Management, University of Pretoria, South Africa. 

 
Accepted 27 November, 2019 

 
Innovation is one of the characteristics that distinguish an entrepreneurial venture from one that is non-
entrepreneurial. In a situation where undifferentiated mass production is the defining feature of the 
global coffee industry, some Rwandan coffee producers have undertaken innovative actions in 
branding and niche marketing by developing speciality coffees. Though Rwandan farmers could in the 
past survive without innovation initiatives, seeing as they only competed in protected environments, 
with current globalisation initiatives innovation is no longer a luxury but a necessity. Innovative 
practices do not only marginalise the volatile nature of costs faced by these producers but also 
increase their profit margins. The purpose of this study is to assess the innovative nature of the 
agribusinesses, specifically a case study of the coffee industry in Rwanda. The coffee industry has 
been transformed from a highly controlled, politicised industry to a liberalized sector that is quickly 
developing a prized niche product, (namely specialty coffee). This study highlights important 
recommendations that governments and NGOs supporting the agricultural sector in Rwanda, could 
apply to enhance innovation in the Rwandan agricultural sector in general, and the coffee industry in 
particular. 

 
Key words: Entrepreneurship, SME’s, innovation, creativity, coffee industry. 

 
INTRODUCTION 

 
The survival and improved contribution of small and micro 
enterprises (SMEs) in addressing the problems of poverty 
and unemployment can be achieved by the adop-tion of 
an entrepreneurial culture and innovative practi-ces. This 
is especially true in the agricultural sector. SMEs can 
contribute greatly to the alleviation of poverty and 
creating jobs when the agricultural sector forms a big 
component of the country’s economy. Many developing 
countries have benefited less from free market global 
economy due to the exportation of commodities with low 
values, for example, raw materials, instead of value 
added intermediary and final products that are of higher 
perceived value. It is evident that strategies need to be  
 
 
 
*Corresponding author. E-mail: alex1@up.ac.za. Tel.  
+27828946602. 

 
 
 

 
planned and implemented to reverse the decline of 
Africa’s share of world trade (Murenzi and Hughes, 
2006:252). Through the development of regional and sub-
regional integration coupled with the development of 
national science and technological innovative and entre-
preneurial skills among other things, the fortunes of 
SMEs can be reversed.  

Rwanda is a small landlocked and mountainous coun-
try commonly referred to as "the country of a thousand 
hills". It is bordered by Uganda, Burundi, Tanzania, and 
the Democratic Republic of Congo (DRC). Rwanda is 
located in East-Central Africa and has a surface area of 
2.6 million hectares, of which only 1.4 million hectares is 
arable land. The Rwandan economy is heavily dependant 
on agriculture which is still largely smallholder driven 
(Haba, 2004:1). Coffee is grown by small scale coffee 
farmers estimated at 500 000 in number, with an average 
of 165 coffee trees per farmer (Ocir Cafe, 2008). The 

file:///C:\Users\user\Documents\REPUBLICATION\AGRICULTURAL%20SCIENCES\AppData\Local\Temp\www.internationalscholarsjournals.org


 
 
 

 

agricultural sector contributes about 85% of export 
revenue (World Bank, 2010). The share of agriculture to 
Rwanda’s GDP was 38.2% in 2007, services 41.7% and 
industry 20.1% (The World Fact book, 2008). According 
to the World Bank (2007a) agriculture in Rwanda cur-
rently accounts for just fewer than 40% of GDP and 
provides jobs to 90% of the population. Coffee is one the 
major exports of Rwanda; other major exports include tea 
and pyrethrum.  

Historically, Rwanda has produced Arabica coffee on 
small farm holdings. Missionaries may have first introdu-
ced coffee into Rwanda in the early part of the twentieth 
century, but it was not until the 1930s that colonial 
authorities actually required Rwandan farmers to plant at 
least one-fourth of their land with coffee trees 
(Boudreaux, 2007:4) . The author further states that the 
coffee industry has played a major role in Rwanda’s 
development because coffee for many years has been 
the country’s top export and chief source of foreign 
exchange income.  

Before the introduction of speciality coffee production, 
the Rwandan Coffee sector was engulfed in a low quality-
low quantity loop (Gahamanyi, 2005). Primarily among 
many reasons for this was the decreased coffee prices at 
the world coffee market, a situation arising out of increa-
sed worldwide production and consolidation of purcha-
sing by multinational corporations as well as the 1994 
Genocide in Rwanda, which left the sector in dismay.  

This study illustrates how coffee farmers in Rwanda 
have adopted process and market innovations as a 
means of improving the quality and output of their coffee, 
hence improving their livelihood. This study emphasises 
the fact that even in the most basic forms of production, 
innovation is possible. The following research questions 
apply: 
 
Question 1: What is the relationship between the different 
innovation factors and the different biographic variables? 
Question 2: What is the relationship between the different 
innovation factors and the profit level of coffee farmers? 
Question 3: What is the relationship between the different 
innovation factors and the perceived performance of 
coffee farmers? 
 

Globalisation exposes entrepreneurs everywhere to 
merciless competition as tariffs are reduced and trading 
straddles national borders (Rwigema and Venter, 2004). 
Protectionism is losing ground and governments are 
compelled to open up national markets to compete 
against aggressive external producers. Survival depends 
upon the creativity and resilience of a country’s entrepre-
neurs. The question arises if innovation, through product 
differentiation and niche marketing, can give a small pro-
ducer an edge over competition nationally and globally, 
where undifferentiated mass production and marketing is 
the norm. 

Rwanda coffee farmers are competing with other coffee 

producers to improve their product, expands their know- 

 
 
 
 

 

ledge of the global coffee market, and increase demand 
for their goods (Boudreaux, 2007:1). Small and Medium 
Enterprises (SMEs) operate in an environment that is 
extremely competitive. Here low technology and capital 
requirements, easy to copy processes and ideas result in 
consequently high failure rates. Therefore, Rwanda cof-
fee farmers need to distinguish themselves from other 
role players in the meso-environment through creative 
and innovative ways. Innovation and creativity should be 
regarded as core keys to the successful business enter-
prise in Rwandan coffee farmers. 
 
 
LITERATURE REVIEW 
 
According to Le Roux (2003:11) entrepreneurship is the 
vehicle for companies and societies to find innovative 
ways to exploit opportunities as a way to survive in an 
ever-changing environment. This is also supported by 
Kruger (2004:3) who mentions that creativity and innova-
tion are major factors in being entrepreneurial and 
meeting the changing needs of society. Entrepreneurship 
is crucial in any country for birthing new ideas, creating 
new enterprises and nurturing the economy. It is particu-
larly important in overcoming unemployment (Hisrich and 
O’Cinneide, 1985:1). Entrepreneurship can also be des-
cribed as vibrant process of pursuing an opportunity and 
creating incremental wealth and value (Echecopar et al., 
2003:2). Healthy entrepreneurship leads to positive finan-
cial returns for both independent business ventures and 
organisations alike.  

Entrepreneurship is regarded as the process that cau-
ses changes in the economic system through the innova-
tions of individuals who respond to opportunities in the 
market (Nieman and Nieuwenhuizen, 2009). The value of 
entrepreneurship is currently recognised through con-
cepts like creativity, innovation and opportunity develop-
ment in a dynamic environment (Kruger, 2004:18). While 
innovation lies at the heart of entrepreneurship, creativity 
seems to be the root of innovation (Wickham, 2006). It is 
further argued that entrepreneurial activity, with innova-
tion as key leads to increased productivity and more 
effective competition in the market environment 
(Antonites, 2003:49). The author concludes by holding 
the view that the combined variables of innovation and 
creativity distinguish the entrepreneur from the general 
small business person.  

Three common skills are generally found in the defini-
tion of entrepreneurship namely (1) creativity and innova-
tion; (2) resource gathering and the founding of an 
economic organisation; and (3) the chance for gain under 
increased risk and uncertainty (Dollinger, 2003:5). Kruger 
(2004:28) concluded that the key concepts of the entre-
preneurship domain are innovation and strategic object-
tives that impact on a venture’s potential for growth.  

Creativity and innovation seems to be fundamental to 

true entrepreneurship. Wickham (2006:5) identifies three 

aspects of entrepreneurship: 



 
 
 

 
Table 1. Definitions of innovation.  

 
Definition Author   
Innovation is the process by which organisations master and implements the design and 

production of goods and services that are new to them, irrespective of whether they are new 

to their competitors, their country, or the world. 

 
Innovation is the mechanism where new methods, customs, or devices are used to perform new 

tasks. 

 
Innovation is the sum of the invention plus the commercialisation of that invention. 

 

Innovation is further described as the introduction of new products and/or improvement of 

products, services and production processes, the driving force of a nation’s economic 

development and an improvement in the competitiveness of its firms. 

 
Innovation additionally provides a centre for profit and is a consequential product of 

entrepreneurship. 

 
Innovation is the successful implementation of creative ideas. 

 
Successful innovation is the use of new technological knowledge, and/ or new market 

knowledge, employed within a business model that can deliver a new product and/ or service 

to customers who will purchase at a price that will provide profits.  

 
 
Mytelka (2000:18) 
 

 

Sunding and 

Zilberman (2000:2) 

 
Ireland et al., (2001:73) 
 

 
Oerlemans et al. (2001:2) 
 

 
Shepherd and 

Kruger (2002:167) 

 
Kruger (2004:103) 

 

Kaplan and 

Warren (2007:24) 

 

 

(i) The entrepreneur as a manager undertaking particular 
tasks; 
(ii) The entrepreneur as an economic agent generating 
particular economic effects; and 
(iii) The entrepreneur as an individual of a particular 

personality. 
 

Effective innovation has a direct impact on reduction of 
poverty and the improvement of the quality of life of the 
people (Roelofse, 2006:7). Innovation is defined as the 
key process by which products, processes and services 
are created, and by which businesses generate jobs and 
wealth (Roelofse, 2006:7). Innovation is the specific tool 
by means of which entrepreneurs exploit change to 
create a business opportunity. A range of definitions of 
innovation are proposed by different authors, as summa-
rised in Table 1. 
 

 

Definitions of innovation 

 

Kirby (2003:132) is of the opinion that the advancement 
of creativity through the generation, identification and 
exploitation of opportunities, leads to innovation. Creati-
vity is therefore a prerequisite and at the root of innova-
tion. Accordingly the relationship between innovation and 
creativity is discussed. According to Majaro (1988:7) 
creativity is the thinking process that leads to the genera-
tion of ideas, while innovation is the practical application 
of such ideas towards meeting the firm’s objectives in a 
more effective way. The main source of innovation is 
creative thinking, but innovations can also come from 

 
 

successful exploitation of opportunities both in and out-
side the business. Kruger (2004:111) further explains that 
creativity is the generation and articulation of new ideas 
whereas innovation is the application of new ideas and 
the implementation of inventions.  

Creativity is a catalyst in the process of new product 
development (Antonites, 2003:98). Firms are required to 
exhibit creativity and innovation if they are to stay alive 
and thrive in a competitive and increasingly demanding 
world (Carrier et al., 1999). The identification of new op-
portunities is one of the key tasks of entrepreneurs (Wick-
ham, 2006:7). This author further defines an opportunity 
as a gap in a market where the potential exists to do 
something better and hence creates value. Entrepreneu-
rial innovations should therefore engage in feasible and 
viable market opportunities.  

As innovation based competition diffused through the 
processes of trade liberalization, it accelerated the pace 
of technological change. This increased the need for 
SME’s especially in developing countries to engage in a 
continuous process of innovation irrespective of the 
sector in which they are located (Mytelka, 2000:15). 
Today’s organisations are faced with slow growth, com-
moditisation and global competition; innovation and 
competitiveness are seen as the main economic multi-
pliers and an effective solution to this ever-growing 
dilemma (Montalvo, 2006:312).  

Different forms of organisational innovation are identi-

fied which are related to the: product, service and 

process (Smith, 2010). 
 
(i) Product innovation refers to the development of a new 



 
 
 

 
Table 2. Types of innovations.  

 
Innovation Components System 

Incremental Improved No change 

Modular New No change 

Architectural Improved New configuration 

Radical New New configuration 
 

Source: Adapted from Smith (2010). 
 

 

product or improvement of an existing product so that it 
appears unique and hence persuades consumers to 
make a purchase.  
(ii) Service innovation is a new way of providing a service 
in a way that is different and/or better than the service 
provided by their competitors.  
(iii) Process innovation involves unique and better 

production and manufacturing methods which deliver pro-

ducts that are better and at lower cost compared to 

competitors' products. 
 

The product, service and process forms of innovation 
take place through component and systemic innovation, 
which are incremental, modular, architectural and/or 
radical (Table 2).  

Incremental innovation refers to the refinement and 
improvement of an existing product, or service by impro-
ving the components (Davila et al., 2006:38; Morris et al., 
2008:63; Morten et al., 2005:315; Smith, 2006:22, 29). 
Incremental innovation either improves something that 
already exists, or reconfigures an existing form of techno-
logy to make it more relevant for newly developed needs 
and purposes (Harvard Business Essentials, 2003:2). 
Modular innovation uses the architecture and configura-
tion of the existing system but introduces new compo-
nents (Smith, 2006:31). Architectural innovation refers to 
the process when the components and associated design 
concepts are renewed, and the system changes as new 
linkages are instituted (Smith, 2006:32). Radical innova-
tion involves a whole new design of a new product or 
service delivered in an entirely new way through the 
development of specialised components or systems 
(Davila et al., 2006:38; Morris et al., 2008:63; Morten et 
al., 2005:315; Smith, 2006:29). Radical innovation intro-
duces something new to the world, which departs from 
existing technology or methods (Harvard Business 
Essentials, 2003:2). Semi-radical innovation would 
involve substantial change to either the business model, 
or technology of an organisation but not to both (Davila et 
al., 2006:38; Morris et al., 2008:63; Morten et al., 
2005:315).  

It is argued that the use of radical and modular innova-

tions should be seen as opportunities for the Rwandan 
farmers to investigate, consequently that these forms of 

innovation are currently under-utilised by Rwandan coffee 
farmers. In addition, the re-vitalisation of incremental and 

 
 
 
 

 

architectural innovations should be examined for reasons 

indicated by Stark (2000) as follows: 
 
(i) Technology is changing rapidly with new products, 
new processes and services from competitors. 
(ii) The effect of a changing environment with product 
lifecycles becoming increasingly shorter means that old 
products or services will have to be replaced with new 
ones.  
(iii) Customers are increasingly more sophisticated, 
segmented and demanding; they expect more in terms of 
quality, originality and price.  
(iv) With markets and technology changing vehemently, 
good ideas are becoming very easy to copy. This 
therefore calls for continuous methods of devising new 
and better products, and faster processes and services.  
(v) Innovation leads to faster growth, increased market 
share and better corporate positioning. 
(vi) Boyd (2004:5) also states that innovation is the 
lifeblood of any successful business. Among the most 
important aspects of success in small firms is innovative-
ness, as exemplified by phenomenal growth of start-up  
.ventures like Starbucks, Apple Computers, Dell, and 

Kinkos (Daily et al., 2005:773). 
 

The coffee industry and the overall agricultural sector 
should also invest in the use of modern technology in the 
production processes since the agricultural sector em-
ploys 90% of the whole Rwandan population (World 
Bank, 2007b). Unfortunately many coffee farmers still use 
traditional equipments like hoes to cultivate the land, and 
the few coffee washing stations do not satisfy the service 
of the coffee production capacity. The use of new and up-
to-date technology has the following advantages to 
SMEs: 
 
(i) Better and more competitive products and services. 
(ii) Improved efficiency 
(iii) Reduced operational and production costs and 
(v) Improved quality of products and services. 
 
The survival of SMEs and their contribution to addres-
sing the problem of poverty in Rwanda is directly tied to 
the availability of sufficient and appropriate agricultural 
information technologies to increase production; promote 
operational efficiency and improve managerial decision 
making (Haba, 2004:3). Additional to the product/service, 
process and organisational forms of innovation, the fol-
lowing forms of innovation are also stipulated (Davila et 
al., 2006:38; Morris et al., 2008:63; Morten et al., 
2005:315): 
 
(i) Discontinuous innovation: This form of innovation is a 
breakthrough type of innovation which results in the 
changing way customers address their needs for a pro-
duct or a need that was not addressed before.  
(ii) Dynamically continuous innovation refers to a drama-

tic improvement of a product or service over an existing 



 
 
 

 

state-of-the-art solution. 
(iii) Continuous innovation involves the step-by-step 
enhancement of an existing product. 
(iv) Initiation innovation that involves copying, adapting, 

or mimicking the innovations of other firms. 
 

According to Janvry et al. (1999:2), technological 

change in agriculture can reduce poverty in the following 

ways: 
 
(i) Firstly, it can help reduce poverty directly by raising the 
welfare of poor farmers who adopt the technological 
innovation. Potential benefits can be increased produc-
tion for home consumption, more nutritious foods, and 
higher gross revenues from sales.  
(ii) Secondly, technological change can also help reduce 

poverty indirectly through the effects of the adoption of 

the new technologies by both poor and non-poor farmers. 
 

For these reasons it is important to investigate the 

possibilities of application of innovation in the agricultural 

sector. 
 

 

Application of innovation in the agricultural sector 

 

Sunding and Zilberman (2000: 2) identify the following 

categories of innovation in the agricultural sector which 

include: 
 
(i) Innovations that are embodied in capital goods such 
as tractors, fertilizers and seeds. 
(ii) Innovations that are disembodied for instance integra-
ted pest management schemes. 

A special research and development report by the 
World Bank (2007a:1) on the enhancement of agricultural 
innovation explains the following innovative changes that 
have taken place in the context of agricultural develop-
ment: 
 

(i) Markets, and not production, increasingly drive 
agricultural development. Previously the focus was on the 
improvement of staple foods. But with their falling prices, 
strategies have been adopted that enhances agricultural 
diversification and increases the value of agricultural 
produce. 
(ii) The production, trade, and consumption environment 
for agriculture and agricultural products is progressively 
more dynamic and evolving in unpredictable ways.  
(iii) Knowledge, information, and technology are increa-
singly generated, diffused, and applied through the pri-
vate sector. Private businesses develop and supply a 
substantial number of the technologies that farmers use, 
for example, seeds, fertilizers, pesticides, and machinery.  
(iv) Exponential growth in information and communica-
tions technology (ICT), especially the internet, has trans-

formed the ability to take advantage of the knowledge 

developed in other places or for other purposes. 

 
 
 
 

 

(v) The knowledge structure of the agricultural sector in 
many countries is changing markedly. Thirty years ago, 
most farmers were uneducated. Nowadays there is an 
overall increase in the education levels of farmers in 
many countries. Great numbers of experienced and edu-
cated people in the farming community, the private sec-
tor, and non governmental organisations (NGOs) can 
now interact to generate new ideas. 
(vi) Agricultural development increasingly takes place in 
an international setting. Globalization causes quality stan-
dards to be defined increasingly by international markets. 
This leads to small sectors that suddenly confront strong 
potential demand. 
 

Having mentioned the process of innovation in the 
agricultural sector, it is important to discuss the factors 
that affect the successful application of innovative prac-
tices in any country. It is argued that the coffee industry 
has adopted a differentiation strategy focused on specific 
niche markets in the world as a means of innovation and 
the creation of world brand. This has helped Rwanda to 
distinguish its coffee from the coffee of its global com-
petitors. With the production of speciality coffee Rwandan 
farmers have been able to obtain higher prices for their 
coffee leading to more profit. Discerning consumers now 
demand authenticity: they want stories of where their 
coffee beans come from (Anon, 2008:68). So the best 
coffees will increasingly be differentiated, like fine wines 
and spirits, and subsequently sold at previously unthink-
able prices  

The author is of the opinion that countries have deve-
loped specific national product brands in which they have 
a competitive advantage that is acquired over a long 
period of time. Examples include French wines and 
Cuban cigars. Developing national brands in this era of 
globalisation where ideas and technologies spread very 
fast is a difficult task. Growing a brand from the most 
mundane of products like coffee requires creative innova-
tion. Within national brands, innovative entrepreneurs 
have made innovations that target specific niche markets 
for instance; Rolex and Swatch are some of the many 
Swiss watches that have an established niche market. 
SMEs in the Rwandan coffee industry have imitated the 
Swiss strategy by producing speciality coffees in different 
areas of the country and branding it uniquely based on its 
specific flavour. Examples include Rwandan Medium, 
“Akadugudu” Rwandan Blend, Rwandan Dark, “Vooba 
Vooba”, Naturally Flavoured Coconut and Naturally 
Flavoured Hazelnut. The Rwandan coffee industry’s com-
petitive advantage is based on quality processing, pack-
aging and niche marketing.  

According to Gahamanyi (2005) Rwanda is an emerg-
ing specialty coffee producer. Within the past years cof-
fee farmers have become more organized by implemen-
ting quality- enhancing procedures. Interventions have 
taken place in the form of the establishing of central 
washing stations, improved coffee processing procedures 
and an increase in the training of farmers by quality 



 
 
 

 
Table 3. Value of coffee exports and their contribution to the total exports of Rwanda (in billion US$).  

 
Year 1990 1992 1996 1998 2000 2001 2002 2003 

Value of coffee exports 65.7 35.1 43 25.9 22.4 19.4 19.2 15 

Total exports 103 69 61.7 64.4 69 73 65.9 62.9 

% Coffee contribution 63.8 50.9 69.7 40.2 32.5 26.6 29.1 23.8 
 

Source: Adapted from Gahamanyi (2005). 
 

 
Table 4. The evolution of coffee production and quality from 1986 to 2004.  

 
 Year 1990 1992 1996 1998 2000 2001 2002 2003 2004 

 Production (tons) 39575 38970 15239 14268 16098 18267 19426 14175 25000 

 % Standard coffee 7 0.32 0.25 7.4 19.5 18.5 29.4 32.4 40 

 % Ordinary coffee 86.9 93 82.9 80.5 72.4 75 58 55 50 
 

Source. Adapted from OCIR Café (Gahamanyi, 2005). 
 

 

assessment cupping laboratories. Besides differentiation, 
the coffee industry has also adopted niche market 
operations as another form of market innovation.  

According to Gahamanyi (2005) only 20% of world 
coffee can qualify as specialty coffee today. Low-grade 
coffee sells for 28 US cents per kilogram (kg) on average; 
specialty coffee earns 80 cents per kg. The forecast for 
coffee prices on the international market shows a tenden-
cy towards low prices. Global consumption remains 
modest except for the category of high quality coffee 
which contributes seven percent of the volume of coffee 
put on the international market at the moment, and which 
has also been rising by 15% a year. Table 3 is an indica-
tion of the value of coffee exports and their contribution to 
the total exports of Rwanda (in billion US $). 

The Rwandan coffee sector was engulfed in a low 
quality-low quantity loop primarily among many reasons 
for this was the dropping of coffee prices at the world 
coffee market. This situation arose out of increased 
worldwide production and consolidation of purchasing by 
multinational corporations as well as the 1994 genocide 
in Rwanda which left the sector in shambles. After the 
introduction of specialty coffee production in 2001, the 
value of standard coffee production in Rwanda increased 
and ordinary coffee production decreased as indicated by 
Table 4. In 2007, importers paid US $ 55.00 per kilo for 
the best Rwandan coffee. 

Though growth in worldwide coffee consumption 
remains modest, the consumption of high quality specia-
lity coffee is rising by 20% a year. This is in favour of 
Rwandan coffee farmers. According to Boudreaux 
(2007:1) Rwanda’s speciality coffee industry is helping to 
improve the lives of coffee producers and of other 
Rwandans in the following ways: 
 

(i) The speciality coffee industry in Rwanda aids in local 

poverty alleviation and job creation. 

 
 

 

(ii) The speciality coffee industry provides opportunities 
for developing business and management skills. 
(iii) The actions of specific coffee entrepreneurs have 
affected the lives of ordinary Rwandans, for example big 
buyers who buy raw coffee from very poor farmers with 
no access to washing stations, and who then process raw 
coffee beans into processed quality coffee.  
(iv) Entrepreneurial activities within the Rwandan specia-
lity coffee industry provide Rwandans with opportunities 
to interact in ways that may promote post-conflict reconci-
liation.  
(v) As a major export of the country, coffee sales have 
boosted the economy. 
(vi) The production of speciality coffee is believed to have 
opened up more trading opportunities with the outside 
world.  
(vii) To have a sustainable organisation, innovation is 
essential even to small businesses (Lumsdaine and 
Binks, 2007:183).  
(viii) Innovation can be used as strategic process that 
enables organisations to establish a position of compe-
titive advantage (Poon and MacPherson, 2005:259).  

Innovation is the key characteristic of an entrepreneu-
rial business that will ultimately affect business 
performance (Georgellis et al., 2000:8). Accordingly, 
another advantage of innovation is that it leads to high 
performance hence business or entrepreneurial success. 
Zhao (2005:28), investigating the perceptions of entrepre-
neurship and innovation, found that entrepreneurial busi-
nesses (businesses that were continuously creating new 
products and services, projects, new business opportu-
nity and markets), regardless of size and the industry, 
had a positive link with performance.  

The main objective of the research is to assess the 

innovative nature of the agricultural based small busi-

nesses in Rwanda belonging to the Abahuzamugambi 

Coffee Cooperative. The study endeavours to determine 



 
 

 
Table 5. Gender of the participants.  

 
Gender Frequency Percentage Cumulative frequency Cumulative percentage 

Male 43 43 43 43 

Female 57 57 100 100 

Total 100 100 100 100 
 
 

 

the current innovation climate by use of the above rese-
arch questions in order to recommend enhanced strate-
gies to the Rwanda coffee industry. This could form a 
very good base for further investigation as to what can be 
done to increase the levels of innovation in the larger 
Rwanda agricultural sector and elsewhere in the world. 
The study investigated the baseline of innovation, in or-
der to determine the current innovation climate of coffee 
farmers belonging to Abahuzamugambi Coffee Coopera-
tive in Rwanda. The Abahuzamugambi Coffee Coopera-
tive in Rwanda won the Swedish City of Gothenburg’s 
International Environmental Prize for 2005, for establish-
ing organic coffee production successfully and improving 
social structures (Anon, 2005). The importance of inno-
vation, to also ensure the entrepreneurial success of 
these coffee farmers, needs attention. This could form a 
very good base for further investigation as to what can be 
done to increase the levels of innovation in the larger 
Rwanda agricultural sector.  

Kaplan and Warren (2007:24) emphasise the impor-
tance of innovation by positing that many firms could in 
the past survive and prosper without innovation, however 
they competed in a protected environment. The improve-
ment of and/or the introduction of new products and 
services through innovation should enhance economic 
growth and the international competitiveness of these 
countries. 

 

RESEARCH METHODOLOGY 
 
Research design 
 
The intention of this study was to assess the innovative climate in 
the Rwanda coffee industry. The study is a quantitative formal, 
cross-sectional, ex post facto non-experimental design (Cooper and 
Schindler, 2006: 141). Cross-sectional studies are studies repre-
senting a snapshot of circumstances at one point in time... 

 
Population and sampling 
 
A sample of 100 speciality coffee producers who are members of 
one of the pioneer coffee cooperatives in Rwanda, the Abahuzamu-
gambi Coffee Cooperative, (which has 2000 members), was selec-
ted as the unit of analysis for this study. Non-probability, con-
venience sampling was done with the selection of accessible 
respondents who were available for the administration of group 
questionnaires. 

 
Research instrument 
 
The questionnaire consisted of two sections, namely: a biographic 

 
 

 
section, with questions concerning the biographical data of the 
entrepreneurs and second section measured the innovativeness of 
the organisation (Wang and Ahmed, 2004:307). The following 
components were embraced by the instrument: product innovative-
ness, market innovativeness, strategic innovativeness, process 
innovativeness, and behavioural and innovativeness. The question-
naire was translated to Kinyarwanda, Rwanda’s only local lan-
guage. 

 

Data collection and analysis 
 
A pencil-and-paper group administered questionnaire was used in 
this study as the method of data collection. The questionnaires 
were physically handed out to the sample. In terms of the analysis 
an ex-post-facto inference were made of the relationships between 
the measured variables. Statistical analysis was carried out on 
empirical data obtained whereas descriptive statistics was applied 
and the means, standard deviations, frequencies, and variances of 
the biographic variables determined. One way Analysis of Variance 
(ANOVA) was conducted to determine the relationships between 
the innovation factors as dependent variables, and the biographic 
variables, as well as profit and perceived performance as indepen-
dent variables. 

 

RESULTS 
 

Descriptive statistics are performed to describe the 

characteristics of the sample, while the inferential results 

are derived to answer the research questions. 

 

Demographic characteristics of the sample of 

participants from the Abahuzamugambi coffee 

cooperative in Rwanda 
 
The following descriptive results portray the demographic 
nature of the unit of analysis. 

The biographical data shown that the sample drawn 
can be generalised as being a relatively young sample as 
the majority of the respondents were below 45 years of 
age (72%) (Table 6). The number of speciality coffee 
farmers decreased as age increased, with 28% older than 
45 years of age (Table 6) . The oldest farmer was 86 
years old while the youngest farmer was 18 years old 
(Table 6). The gender distribution is: 43% male and 57% 
female (Table 5).  

Table 7 indicate that the majority of the participants 
(75%) had primary school qualification, followed by 12% 
of respondents with secondary school qualification, 12% 
with no education and 1%.  

Table 8 indicates that the majority of participants have 

been in coffee production between 4 to 6 years (60%) 



 
 
 

 
Table 6. Age of participants.  

 
        Age   Frequency Percentage Cumulative frequency Cumulative percentage 

        24  36 36   36 36     
 25-44  36 36   72 36     

        45  28 28   100 28     

        Total  100 100   100 100     

 Table 7. Educational levels of participants.         
              

 Educational level  Frequency Percentage   Cumulative frequency  Cumulative percentage 

 No education   12  12 100 100     

 Primary school   75  75 75 75     

 Secondary school   12  12 87 87     

 Tertiary Institute/University 1  1 88 88     

 Total   100  100 100 100     

      Table 8. Years in coffee production.         
                

        Year Frequency Percentage Cumulative frequency Cumulative percentage  

 1-3  24 24   24 24     

 4-6  60 60   84 84     

 7-9  14 14   98 98     

       Above 10  2 2   100 100     

        Total  100 100   100 100     

   Table 9. Average coffee production.         
          

   Production (Kg) Frequency  Percentage Cumulative frequency  Cumulative percentage  

 1-5  88  88  88 88     

 6-10  7  7  95 95     

 11-15  1  1  96 96     

    16 and above  4  4  100 100     

        Total  100 100 100 100     

   Table 10. Number of employees.         
             

       Employee Frequency Percentage Cumulative frequency Cumulative percentage  

 1-5  81 81   81 81     

 6-10  14 14   95 95     

 11-15  5 5   100 100     

        Total  100 100   100 100     

 

 

and 1 to 3 years (24%), with participants between 7 to 9 
years and more than 10 years representing only 14 and 
two percent of the sample respectively.  

According to Table 9, majority of the participants (88%) 

average coffee production is between 1 to 5 kg per tree, 

the remaining 8% of participants’ average coffee produc- 

 

 

tion is between 6 and 15 kg per tree, and 4% of partici-
pants produce above 16 kg of coffee per tree.  

Table 10 indicate that 81% of participants employ five 

or less workers on their farms, 14% of the participants 

employ between 6 to 10 workers while 5% of participants 
employ between 11 to 15 workers. 



          

 Table 11. Profit per season.         
          

 Amount in Rwandese Francs Frequency  Percentage   Cumulative frequency Cumulative percentage 

 Frw 500 000 and less 88 88  88 88    
 Frw 510 000-600 000 7 7  9 5 95    

 Frw 610 000-700 000 3 3  98 98    

 Frw 710 000-800 000 1 1  99 99    

 Frw 800 000 and above 1 1  100 100    

 Total 100 100  100 100    

    Table 12. Business performance.        
         

    Business performance  Frequency Percentage Cumulative frequency  Cumulative percentage 

    Extremely well 33 33  33 33    
    Quite well 46 46  79 79    

    Not so well 6 6  85 85    

    Badly 3 3  88 88    

    Improved 12 12  100 100    

    Total 100 100  100 100    

  Table 13. Product innovation.         
           

    Independent variable   F df p > F 

    Gender   0.34 1 0.5644    
    Level of education   0.15 3 0.9297    

    Number of years attended in education  0.77 4 0.5489    

    Number of years involved in coffee production 0.19 2 0.8239    

    Alternative sources of income   0.59 1 0.4470    

    Average coffee production (kg)  2.78 2 0.0698    

    Number of employees   1.22 2 0.3016    

    Total expenditure per hectare   1.00 3 0.4003    
    Profit per season   0.24 3 0.8697    

    Perceived business performance  4.77 4 0.0021*    

  *p = 0.05.         
 
 

 

Table 11 illustrates that 88% of the participants profit 
per season is Frw 500 000 (equivalent to US $ 909) or 
less. Ten percent of participants earn between Frw 510 
000 and 700 00. Only 2% of the participants earn more 
than Frw 710 000 (US $1,291).  

Table 12 indicate that 33% of participants were of the 
opinion that they performed extremely well (thus funda-
mental increases in business growth, example, turnover 
and profit), 46% of participants’ opinions were that they 
performed quite well (example, moderate increases in 
turnover and profit) and the remaining 21% indicated that 
they did not perform well (not increases or decline in 
turnover and profit). Table 13 illustrates the results of one 
way Analysis of Variance with factor one and the product 
innovation sub-scale as dependent variable (N = 100).  

Only the groups formed in terms of perceived business 

 
 

 

performance scored significantly different on product 
innovation as a sub-scale. These differences were further 
investigated by means of a t-test on the LS-mean scores 
on the product innovation sub-scale. Individuals that eva-
luated their business performance as badly scored the 
highest on the product innovation sub-scale. Table 14 
illustrates the results of one way Analysis of Variance 
with factor two and the market innovation sub-scale as 
dependent variable (N = 100).  

The groups formed in terms of number of years 
involved in coffee production as well as perceived 
business performance, scored significantly different on 
market innovation as a sub-scale. These differences were 
further investigated by means of a t-test on the LS-mean 
scores on the product innovation sub-scale. Farmers that 
were involved in coffee production for one 



 
 
 

 
Table 14. Market innovation.  

 
 Independent variable F df p > F 

 Gender 2.47 1 0.1213 

 Level of education 0.54 3 0.6582 

 Number of years attended in education 2.24 4 0.0752 

 Number of years involved in coffee production 7.22 2 0.0015* 

 Alternative sources of income 0.24 1 0.6272 

 Average coffee production in Kg 1.78 2 0.1775 

 Number of employees 0.05 2 0.9549 

 Total expenditure per hectare 1.42 3 0.2470 

 Profit per season 0.68 3 0.5694 
 Perceived business performance 6.10 4 0.0003* 

 
*p = .05. 

 
 
 
 

Table 15. Strategic innovation.  
 

 Independent variable F df p > F 

 Gender 7.67 1 0.0074* 

 Level of education 3.78 3 0.0149* 

 Number of years attended in education 3.53 4 0.0117* 

 Number of years involved in coffee production 2.69 2 0.0758 

 Alternative sources of income 0.02 1 0.8883 

 Average coffee production in Kg 3.84 2 0.0268* 

 Number of employees 1.88 2 0.1620 

 Total expenditure per hectare 2.77 3 0.0491* 

 Profit per season 6.00 3 0.0012* 

 Perceived business performance 0.37 4 0.8259 
 

*p = .05. 
 
 
 

 

to three years scored higher on the market innovation 
sub-scale than farmers involved in coffee production for 
more than 4 years. Individuals that evaluated their 
business perfor-mance as extremely well scored the 
highest on the mar-ket innovation sub-scale than those 
who rated their performance as not so well, badly and 
improved accord-ing to previous years, but less than 
those evaluating their perceived business performance as 
quite well. Farmers that perceived their business 
performance as quite well, scored higher on the market 
innovation sub-scale than those perceiving their business 
performance as extremely well, not so well and badly. 

The groups formed in terms of gender, level of educa-
tion, number of years attended in education, average 
coffee production in kg, total expenditure per hectare, and 
profit per season scored significantly different on strategic 
innovation as a sub-scale. These differences were further 
investigated by means of a t-test on the LS-mean scores 
on the strategic innovation sub-scale. Significant 
differences were indicated between genders, 

 
 
 
 

 

with female participants scoring significantly higher on the 
strategic innovation subscale than male participants 
(Table 15).  

Participants with no education scored significantly 
higher on strategic innovation than those with primary, 
secondary and tertiary or university education. Individuals 
with primary education also scored higher on the strategic 
innovation sub-scale than individuals with secondary and 
tertiary/university education. Those who attended 
between 7 and 8 years in education scored significantly 
lower on strategic innovation than those who had 
attended between 1 and 6 years and those above 9 years 
in education. Production above 20 kg of coffee per tree 
scored significantly higher on strategic innovation than 
those who produced less than 20 kg of coffee. Farmers 
who spent between Frw 110 000 and 200 000 per 
hectare scored significantly higher than those who spent 
less than Frw 110 00 and those who spent above 200 
000. Participants whose profit per season was between 
Frw 610 000 and 700 000 scored significantly 



    

Table 16. Process innovation.     
     

Independent variable F df p > F 

Gender 3.82 1 0.0551  

Level of education 5.53 3 0.0020*  

Number of years attended in education 2.54 4 0.0488*  

Number of years involved in coffee production 1.09 2 0.3435  

Alternative sources of income 0.22 1 0.6415  

Average coffee production in Kg 0.20 2 0.8208  

Number of employees 0.55 2 0.5797  

Total expenditure per hectare 1.47 3 0.2315  

Profit per season 1.10 3 0.3570  

Perceived business performance 1.15 4 0.3417  
 

*p = .05. 
 
 

 
Table 17. Behavioural innovation.  

 
 Independent variable F df p > F 

 Gender 2.31 1 0.1339 

 Level of education 3.55 3 0.0194 

 Number of years attended in education 4.33 4 0.0038* 

 Number of years involved in coffee production 0.35 2 0.7095 

 Alternative sources of income 0.17 1 0.6809 

 Average coffee production in Kg 2.83 2 0.0669 

 Number of employees 0.87 2 0.4228 

 Total expenditure per hectare 1.38 3 0.2584 

 Profit per season 3.17 3 0.0306* 

 Perceived business performance 3.70 4 0.0092* 
 

*p = .05 
 
 

 

lower on strategic innovation than those whose profit per 
season was less than Frw 610 000 and above Frw 800  
0. Table 16 illustrates the results of one way Analysis 
of Variance with factor four and the process innovation 
sub-scale as dependent variable (N = 100).  

Only groups formed in terms of level of education and 
years attended in education scored significantly different 
on process innovation as a sub-scale. Further 
investigation by means of a t-test on the LS-mean scores 
indicated that individuals with secondary education 
scored significantly lower on the process innovation sub-
scale than individuals with no education, primary and 
tertiary /university education. Individuals having more 
than seven years or education scored less on the process 
innovation sub-scale, than those with less than seven 
years of education. Table 17 illustrates the results of one 
way Analysis of Variance with factor five and the 
behavioural innovation sub-scale as dependent variable 
(N = 100). Groups formed in terms of number of years of 
education, profit per season as well as perceived 
business performance, scored significantly different on 

 
 
 

 

behavioural innovation as a sub-scale. Further 
investigation by means of a t-test on the LS-mean scores 
indicated that participants with secondary education 
scored less on the behavioural innovation sub-scale than 
individuals with no education, primary and 
tertiary/university education. Farmers indicating their 
profit per season as Frw 610 000 – Frw 700 000 scored 
lower on the behavioural innovation sub-scale than 
farmers indicating their profit per season as less and 
above Frw 610 000 to Frw 700 000. Farmers perceiving 
their business performance as extremely well scored 
significantly lower on the behavioural innovation sub-
scale than farmers perceiving their business performance 
as quite well, not so well and badly. Farmers perceiving 
their business performance as quite well as well as 
improved according to previous years scored significantly 
lower on the behaviour innovation sub-scale, than those 
perceiving their business performance as not so well or 
badly. Farmers perceiving their business performance as 
not so well and badly scored higher on the behaviour 
innovation sub-scale than those perceiving their business 



 
 
 

 

as extremely well and quite well. 

 

DISCUSSION 
 
The following findings are recorded based on the results 

conveyed, based on the research questions revisited. 
 
Question 1: What is the relationship between the 

innovation factors and the different biographic 

variables? 
 
None of the biographic variables showed any significant 
relationship with the product innovation sub-scale as 
dependent variable. According to Wang and Ahmed 
(2004:304) product innovation refers to the novelty and 
meaningfulness of new products introduced to the market 
at a timely fashion. Speciality coffee production is not a 
new product as per this definition because is not a new 
product but an improvement of existing product. 
Rwandan coffee farmers should therefore think of 
creative means of introducing new alternative agricultural 
products. This is supported by Stark (2000) who argues 
that the effect of a changing environment with product life 
cycles becoming increasingly shorter means that old 
products will have to be replaced with new ones. Those 
farmers with only a number of years involved in coffee 
production showed a significant relationship with market 
innovation as dependent variable. None of the other 
biographic variables showed a significant relationship 
with market innovation as dependent variable.  

Farmers who were involved in coffee production for one 
to three years scored higher on the market innovation 
sub-scale than farmers involved in coffee production for 
more than four years. Market innovativeness refers to the 
newness of approaches that companies adopt to enter 
and exploit the targeted market (Wang and Ahmed, 
2004:305). Market innovativeness also includes market 
research, advertising and promotion. This implies that 
farmers who use market innovations skills like advertising 
and market research performed better that those who are 
unaware or do not use market innovation skills. This is an 
indication that farmers should have been involved in 
coffee production for less than three years, they were 
more involved in coffee production than those who have 
been farming for four years and more. Innovation leads to 
faster growth, increased market share and better 
corporate positioning (Stark, 2000). Farmers who have 
been involved in coffee production for more than four 
years should be sensitised to be more active in market 
innovation aspects to enhance the marketing of their 
products.  

Strategic innovation as dependent variable showed a 
significant relationship with the independent biographic 
variables of gender, level of education, number of years 
attended in education, average coffee production in kg, 
as well as total expenditure per hectare. Female partici-  
pants scored significantly higher on the strategic innovation 
subscale than male participants. This could be due to the 

 
 
 
 

 

fact that in Rwanda majority of the population are women 
as a result of the war, and possibly also due to the fact 
that women composed of 57% of the total sample. 
Participants with no education scored significantly higher 
on strategic innovation than those with primary, 
secondary and tertiary or university education. 

Participants who attended seven and eight years in 
education scored lower on strategic innovation than those 
who had less than six years education and scored higher 
than individuals that had more than nine years of edu-
cation. Production above 20 kg of coffee per tree scored 
significantly higher on strategic innovation than those who 
produced less than 20 kg of coffee, which could be an 
indication that strategic innovation could improve coffee 
production. Participants spending between Frw 110 000 
and Frw 200 000 per hectare scored significantly higher 
on the strategic innovation factor than those who spend 
above Frw 200 000. This could be an indication that 
participants spending between Frw 110 000 and Frw 200 
000 per hectare were more aware of the advantages of 
strategic innovation and working on a low budget 
necessitated this action. Those whose profit per season 
was between Frw 610 000 and Frw 700 000 scored 
significantly lower on the strategic innovation factor as 
dependent variable than those whose profit per season 
was less than Frw 610 000 and above Frw 800 000.  

Process innovation refers to the use of new production 
methods, new management approaches, and new 
technology to improve production and management 
processes (Wang and Ahmed, 2004:305). Only those 
groups formed in terms of “the level of education” and 
“years they spent in attaining education” scored 
significantly different on process innovation as a sub-
scale at the 95% level of significance. Further analysis 
indicated that individuals with secondary education 
scored significantly lower on the process innovation sub-
scale than individuals with no education, primary and 
tertiary/university education. Individuals having more than 
seven years of education scored significantly lower on the 
process innovation sub-scale, than those with less than 
seven years of education. The World Bank (2007b) 
encourages the coffee industry and the agricultural sector 
in Rwanda to invest in the use of modern technology in 
the production processes, since the agricultural sector 
employs 90% of the whole Rwandan population.  

Behavioural innovativeness refers to individual, teams 
and management willingness to change (Wang and 

Ahmed, 2004:305). It is when people are receptive to new 
ideas and innovation. Only the “educational level” showed 
a significant relationship with behavioural innovation as 
dependent variable. 

 

Question 2: What is the relationship between the 

different innovation factors and the profit level of 

coffee farmers? 

 

Only two of the innovation factors, namely strategic 



 
 
 

 

innovation and behavioural innovation showed a 
significant relationship with profit per season as indepen-
dent variable. Participants whose profit per season was 
between Frw 610 000 and Frw 700 000 scored 
significantly lower on strategic innovation than who 
whose profit per season was less than Frw 610 000 and 
above Frw 800 000. Farmers indicating their profit per 
season as Frw 610 000 to Frw 700 000 scored lower on 
the behavioural innovation sub- scale than farmers 
indica-ting their profit per season as less and above Frw 
610 000 to Frw 700 000. These findings are an indication 
that farmers having a profit per season of between Frw 
610 000 and Frw 700 000 should be made aware of the 
pos-sible strategic and behavioural innovation strategies 
that should be followed in order to improve their profit. 
 

Question 3: What is the relationship between the 

different innovation factors and the perceived 

performance of coffee farmers? 
 

Results indicated that individuals that evaluated their 
business performance as “poorly performing” scored the 
highest on the product innovation sub-scale. This implies 
that the farmers are aware of product innovation and yet 
their performance is bad. It could be argued that this is a 
result of farmers investing in improving their coffee and 
yet yielding low profits. Individuals that evaluated their 
business performance as extremely well scored the 
highest on the market innovation sub-scale than those 
who rated their performance as not so well, badly and 
improved according to previous years, but less than those 
evaluating their perceived business performance as quite 
well. It therefore seems that a significant relationship 
exists between extreme perceived business performance 
and market innovation. 

 

RECOMMENDATIONS AND CONCLUSIONS 

 

The case of coffee should serve as a model in the 
agricultural sector in Rwanda and elsewhere in poor 
developing countries to encourage creativity and 
innovation as a means of increasing production and 
adding value to products so as to be globally competitive. 
Building farmers’ and communities’ capacity to identify 
and develop market opportunities and experiment 
through the application of innovative participatory approa-
ches, is critical for creating a sustained collective capacity 
for innovation and for creating new alternatives for 
resource-poor farmers, especially women (Sanginga et 
al., 2004:943). Through creative thinking, farmers will be 
able to come up with alternatives either through bringing 
improvements in existing products across production, 
marketing and consumption chain or developing new 
products that are desirable in the world market.  

Innovation should be widely promoted by policy makers 

and practiced by all kinds of businesses, whether small or 

big in order to obtain the competitive benefits that it 

 
 
 
 

 

creates. Everybody is capable of being creative; it is just 
a matter of how individuals develop that creativity within 
them to produce the most favourable results (Nieman and 
Nieuwenhuizen, 2009). Globalisation and free trade com-
pounds the competitive environment of small businesses. 
Protectionism is loosing ground and governments are 
compelled to open up national market to aggressive 
external producers. Rwigema and Venter (2004:10) note 
that globalisation exposes entrepreneurs everywhere to 
merciless competition as tariffs reduce and trading 
straddles national borders. Survival will depend upon the 
creativity and resilience of a country’s entrepreneurs. The 
coffee industry operates in an environment that is 
extremely competitive with low technology and capital 
requirements, easy to copy processes and ideas and 
consequently high failure rates. Therefore distinguishing 
oneself from the crowd through creative and innovative 
ways is the key to success. 

Rwandan farmers will survive stiff competition with 

continuous innovations to sustain their quality orientated 

speciality coffee production. 
 
 
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