The purpose of the study was to assess the impact of innovation on business performance of informal small business traders in Zimbabwe. The Open Theory of Innovation informed the study whilst data for the study was gathered using structured questionnaires where 175 informal small to medium enterprises (SME) offered validated responses. A causal, quantitative approach was assumed and data was analyzed using SPSS 22 software to identify the association, strength and direction of innovation and innovation determinants on SME performance. The results revealed that innovation is determined by product, process, marketing and organisational factors. The study thus found out that product innovation, process innovation and marketing innovation have strong positive association with SME performance (P < 0.05). However, the study found an insignificant association between organisational innovation and SMEs performance. The study thus concluded that for informal SMEs to enhance their performance and graduate from being small entities to large corporates, they should embrace product innovation, process innovation and marketing innovation.

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