The Influence of Innovation Practices on the Relationship between Firm Internal Strategies and Firm Performance: Evidence from the Textile and Garment Industry in Ethiopia
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2021-05
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Abstract
Innovation is key determinant for business to sustainably retain its competitive advantage and survive in the rapidly changing market environment. The contribution of innovation to structural transformation of the economy in Ethiopia through enhancing the share of manufacturing sector is low. The focus of this study is on the influence of innovation practices on the relationship between firm internal strategies and firm performance. The study also emphasize on the mediation effect of innovation practices on the relation between internal strategies and firm performance taking the case of medium and large textile and garment sector in Addis Ababa. Quantitative data is gathered from 231 managers and higher level experts from 71 firms’. The inferential statistics is analyzed by using SMARTPLS statistical software. The result of the study reveal that internal strategies such as management orientation, organizational culture, technology orientation, alliance and networking and knowledge management except market orientation have positive and significant influence on innovation practice. Furthermore, innovation practice mediated the relationship between the internal strategies such as management orientation, organizational culture, technology orientation and organizational learning and management and firm performance where as innovation practice does not have mediation effect on the relation between internal strategies such as market orientation and alliance and networking and firm performance. Thus, based on the findings of the study the main practical implication is to strengthen the capacity and collaboration of relevant partners in the sector to encourage and support to develop the firm internal strategies to influence innovation and increase firm productivity.
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Manufacturing firms, Medium and large size firms