This study was conducted to determine how developing countries can upgrade their coffee production in the global value chain by using systems of innovation. The case of Kenya was undertaken as Kenya has the capacity to produce high-quality coffee, yet its position is not strong in the global value chain. When the coffee market was liberalized in the 1990s, only a few countries managed to improve their position in the GVC. The lowering of the coffee price put a pressure on smallholder farmers and places them at the edge of existence.
By using the Explanatory sequential mixed method, firstly the coffee GVC was analyzed using statistical data, and based on the results, the potential for the Kenyan coffee market was brought up. Secondly, by following the results of the quantitative research, the qualitative analysis examined the current situation in the Kenyan coffee market in perspective of NSI.
The outcome of the analysis shows that Kenya has high potential in the specialty coffee industry. However, to achieve a higher position in the global value chain and improve the situation of smallholder farmers, the thesis suggests a set of recommendations. Improving infrastructure, linkages between various actors, governance and last but not the least, government support may improve the coffee quality and quantity and help to reposition into the specialty coffee global value chain.