Effect of Innovation capability on Competitiveness: A Study on Manufacturing Firms in Ethiopia
DOI:
https://doi.org/10.20372/star.v13i1.08Keywords:
Innovation capability, product innovation, Process Innovation, Marketing Innovation, Organizational Innovation, Competitiveness, Manufacturing firms, Structural equation modeling, Confirmatory factor analysisAbstract
The study examines the impact of innovation capabilities on the competitiveness of Ethiopian manufacturing enterprises using an explanatory research methodology. A systematic questionnaire was used to gather primary data from industrial organizations. The study found that product, process, marketing, and organizational innovations are independent variables influencing firm compatibility. The data was analyzed using SPSS v26 and AMOS v23, and confirmed factor analysis (CFA) was employed to assess the validity and reliability of the results. The average variance extracted (AVE) was greater than 0.5, indicating construct validity. There was guarantee of construct reliability because the Cronbach alpha and composite reliability score were both more than 0.7. The study revealed that innovations in products, processes, markets, and organizations significantly and positively impacted the competitiveness of the firms studied through structural equation modeling and multiple regression analysis. The independent variable that has the most significant positive effect on competitiveness is product innovation (β=0.355, p<0.01, t=8.25), followed by organizational innovation (β=.333; p<0.01; t=9.00). To maintain competitiveness, Ethiopian large and medium-sized manufacturing business owners should continuously enhance their innovation capabilities.
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