Catalysts of Change: Evaluating the Impact of Government-Funded Digital Innovation Hubs on SME Competitiveness in Nigeria

This study examines the transformative role of government-funded Digital Innovation Hubs (DIHs) in enhancing the competitiveness of Small and Medium Enterprises (SMEs) in Nigeria. As Nigeria advances its digital economy agenda, DIHs have been introduced as strategic mechanisms to stimulate innovation, strengthen entrepreneurial capacity, and expand digital participation among SMEs. Despite their growing relevance, limited empirical attention has been devoted to understanding how DIHs impact SME performance in developing contexts. Drawing on secondary data including government policy reports, SME surveys, and development agency publications, this paper explores the impact of DIHs on SME digital adoption, productivity, and innovation capacity across diverse regions in Nigeria. Guided by Innovation Systems Theory, the Inclusive Innovation Framework, and the Resource-Based View (RBV), the study evaluates DIH outcomes through systemic coordination, equity, and capability-building lenses. Findings indicate that DIHs facilitate knowledge diffusion, skill enhancement, and digital adoption, contributing to improved market access and productivity among beneficiary SMEs. However, benefits remain uneven, with DIHs concentrated in urban and southern regions, limiting equitable participation for rural, informal-sector, and northern-based enterprises. The study recommends expanding DIH coverage, strengthening institutional coordination, and implementing culturally and regionally responsive digital inclusion strategies. This research contributes to emerging scholarship on innovation infrastructure in developing economies and offers practical implications for policymakers, development practitioners, and SME stakeholders seeking to build inclusive and competitive digital ecosystems.

Digital Innovation Hubs, SMEs, Inclusive Innovation, Innovation Systems

1. Adeyeye, A. D. (2022). Exploring the dynamics of innovation for inclusive development systems: A study of the Nigerian growth enhancement support scheme [Doctoral dissertation, Stellenbosch University]. Stellenbosch University Institutional Repository. https://scholar.sun.ac.za/handle/10019.1/127004 [Google Scholar] [Crossref]

2. AfDB. (2023). African digital economy report: Leveraging innovation for inclusive growth. African Development Bank Group. https://www.afdb.org [Google Scholar] [Crossref]

3. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108 [Google Scholar] [Crossref]

4. Casadella, V., & Tahi, S. (2025). Inclusive national innovation systems: Rethinking institutions in the light of inclusion imperatives. Journal of Institutional Economics, 21, e2. https://doi.org/10.1017/S1744137425000025 [Google Scholar] [Crossref]

5. Díaz-Arancibia, J., Hochstetter-Diez, J., Bustamante-Mora, A., Sepúlveda-Cuevas, S., Albayay, I., & Arango-López, J. (2024). Navigating digital transformation and technology adoption: A literature review from small and medium-sized enterprises in developing countries. Sustainability, 16(14), 5946. https://doi.org/10.3390/su16145946 [Google Scholar] [Crossref]

6. Foster, C., & Heeks, R. (2013). Conceptualising inclusive innovation: Modifying systems of innovation frameworks to understand diffusion of new technology to low-income consumers. European Journal of Development Research, 25(3), 333–355. https://doi.org/10.1057/ejdr.2013.10 [Google Scholar] [Crossref]

7. Freeman, C. (1987). Technology policy and economic performance: Lessons from Japan. Pinter Publishers. [Google Scholar] [Crossref]

8. George, G., McGahan, A. M., & Prabhu, J. (2012). Innovation for inclusive growth: Towards a theoretical framework and a research agenda. Journal of Management Studies, 49(4), 661–683. https://doi.org/10.1111/j.1467-6486.2012.01048.x [Google Scholar] [Crossref]

9. Hofstede Insights. (2020). Country comparison: Nigeria. Hofstede Insights.https://www.researchgate.net/publication/386275239 [Google Scholar] [Crossref]

10. Idemudia, E. C. (2021). The digital transformation of African societies: Socio-cultural impacts and innovation adoption. Springer. [Google Scholar] [Crossref]

11. Lundvall, B.-Å. (1992). National systems of innovation: Towards a theory of innovation and interactive learning. Pinter Publishers. [Google Scholar] [Crossref]

12. Nelson, R. R. (1993). National innovation systems: A comparative analysis. Oxford University Press. [Google Scholar] [Crossref]

13. Nigerian Communications Commission. (2020). National Digital Economy Policy and Strategy (2020-2030). http://hdl.handle.net/1885/277385 [Google Scholar] [Crossref]

14. Nwagwu, W. (2020). Digital innovation and informal-sector entrepreneurship in Africa: Cultural and structural influences. Information Development, 36(4), 576-589. https://doi.org/10.1177/0266666920906521 [Google Scholar] [Crossref]

15. OECD. (2021). Digital innovation hubs: Supporting SMEs in the digital transformation. OECD Publishing. https://www.oecd.org/industry/digital-innovation-hubs.htm [Google Scholar] [Crossref]

16. SMEDAN. (2023). National survey of micro, small and medium enterprises (MSMEs) in Nigeria. Small and Medium Enterprises Development Agency of Nigeria. https://smedan.gov.ng [Google Scholar] [Crossref]

17. UNCTAD. (2019). Innovation, diversification and inclusive development in Africa. United Nations Conference on Trade and Development. https://unctad.org/system/files/official-document/ser-rp-2017d2_en.pdf [Google Scholar] [Crossref]

18. UNDP. (2022). Digital inclusion and innovation in Nigeria: Policy brief. United Nations Development Programme. https://www.undp.org [Google Scholar] [Crossref]

19. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171–180. https://doi.org/10.1002/smj.4250050207 [Google Scholar] [Crossref]

20. World Bank. (2020). Nigeria digital economy diagnostic. World Bank Group. https://documents.worldbank.org/en/publication/documents-reports/documentdetail/687791591483678938/nigeria-digital-economy-diagnostic [Google Scholar] [Crossref]

• The Indirect Effect of Liquidity and Activity on Company Value with Profitability as an Intervening Variable
• Effect of Financial Skills, Knowledge, and Attitude on The Financial Behaviour of Clergy
• A Decade of Review: Trends in Budget Execution and Financial Performance of Development Projects in Tanzania (2014/15-2023/24)
• The Influence of Pre-Project Planning on the Budget Absorption Rate of Public Funded Infrastructure Projects in Kenya a Comparative Case Study of Narok, Migori, and Kisii County Government Projects
• Assessment of Factors Influencing Digital Transformation in Hotels’ Facility Management in Abuja Metropolis, Nigeria