2024/04/02 by Wakgari, Gudetu, Amentie, Chalchissa, Bali, Neeraj
#Competitiveness #Confirmatory factor analysis #Innovation capability #Manufacturing firms #Marketing Innovation #Organizational Innovation #Process Innovation #Structural equation modeling #product innovation
paper · doi:10.20372/star.v13i1.08
This study aims to investigate the direct effect of innovation capability types (product, process, marketing, and organisational innovations) on manufacturing firms’ competitiveness in Ethiopia. To examine the causal relationship between the independent variables (product, process, marketing, and organisational innovations) and the dependent variable (firms’ competitiveness), a quantitative study using an explanatory research design was employed. Primary data sources were collected from the manufacturing firms using a structured questionnaire. The questionnaires were distributed to different manufacturing firms in the industrial sector using stratified random sampling techniques. Out of a total of 300 structured questionnaires disseminated to firms in the manufacturing sector, 270 were accurately completed and returned. AMOS v23 and SPSS v26 software were used to analyse the outcome. Depending on factor loadings, confirmatory factor analysis (CFA) was used to evaluate the data validity and reliability, in which both independent and dependent variables’ factor loadings were considerably sufficient, with loadings above 0.5 (Ϡ>0.5). Construct validity was assured as the threshold value of >0.5 was exceeded by the average variance extracted (AVE). Both the composite reliability score and Cronbach alpha were higher than 0.7, ensuring construct reliability. The hypotheses were tested using multiple regression analysis and structural equation modeling, showing that all independent variables (product, process, market, and organizational innovations) had a positive and significant impact on firms' competitiveness. Out of all the independent variables, product innovation (β=0.355, p<0.01, t=8.25) has the strongest positive impact on competitiveness, followed by organisational innovation (β=.333; p<0.01; t=9.00). Hence, in order to sustain their competitiveness, it is advised that owners of large and medium-sized manufacturing firms in Ethiopia should continue implementing innovation capability dimensions to better compete in the market.