The paper evaluates the effects of Technological Capabilities, Innovations and clustering on the performance of firms in furniture making industry in Southwestern Nigeria. The aim is to recommend policy measures to enhance the innovative performance of the furniture makers. The research covered Lagos, Oyo, Ondo and Ekiti States because of the predominant of the industry in these selected locations. The sample population consisted of 319 furniture makers. The research instruments were questionnaire and personal observation approaches. The questionnaire was administered to furniture makers and elicited information on the effects of Technological Capabilities, Innovations and Clustering on the performance of firms in furniture industry in Southwestern Nigeria. Personal observation was used to obtain more information on the industry. Both descriptive and inferential statistical techniques were employed for data analysis. The result shows positive impact of technological capabilities, innovations, and clustering on the performance of the firms on new furniture products produced monthly through adaptation or modification on office furniture, cabinet, upholstery, beds, doors among others. Furniture makers benefit immensely from clustering notably in the area of sharing furniture experience from one another. The ideas of adaptation of furniture were obtained from brain storming of the master furniture makers with their colleagues and apprentices, while catalogue, photograph, magazine and their creativity were instrumental to minor modification of furniture products. Interaction between institutions and Furniture Makers needs to be strengthened to avail them of access to technical support services which institutions can render to the industry. So also financial institutions should finance the industry without interest rate.
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