A Sustainable Business Model Innovation Framework towards Enhancing the Global Competitiveness of Ethiopian Manufacturing Firms in the Leather Sector
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Date
2026-01
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Addis Ababa University
Abstract
Adopting Sustainable Business Model Innovation (SBMI) capabilities empowers businesses to compete at a higher level, driving economic growth, enhancing social well-being, and promoting environmental responsibility. By embracing SBMI, Ethiopian manufacturing firms in the leather sector (EMF-in-LS) can continually evolve, challenge conventional methods, explore new revenue streams, and stay ahead of the curve in dynamic market environments. However, EMF-in-LS often struggle with global competitiveness and face challenges in sustainable business model innovation. This is primarily due to many pressing challenges including lack of capabilities and awareness concerning sustainable business model innovation, as manufacturing firm owners and managers are more focused on day-to-day operations and immediate profits. To address these challenges, it is crucial to raise awareness among EMF-in-LS about the importance of SBMI and develop SBMI framework that can enhance their SBMI capabilities. The main purpose of this dissertation is to develop a comprehensive sustainable business model innovation (SBMI) framework for EMF-in-LS, focusing on the sector's comparative advantages and systemic challenges and untapped opportunities in global competitiveness and sustainability.
The research was conducted in Addis Ababa, Ethiopia, chosen for its concentration of leather manufacturing firms and accessibility to key stakeholders. A mixed-methods approach was used to capture comprehensive insights, targeting all the 225 registered, export-oriented Ethiopian leather manufacturing firms, including 34 tanneries, 37 footwear manufacturers, and 154 leather article producers. This crucial sector was selected as it drives employment, exports, and growth in Ethiopia. Purposive sampling was employed to collect both primary and secondary data, which was analyzed using appropriate tools and techniques which have been thoroughly discussed inside this PhD dissertation.
This dissertation presents a validated Sustainable Business Model Innovation (SBMI) framework tailored for Ethiopian manufacturing firms in the leather sector (EMF-in-LS), developed through three empirical studies, each addressing a set of specific objectives of this PhD research.
To address the first objective and inform the development of the Sustainable Business Model Innovation (SBMI) framework, the Empirical study I of this PhD study examines Ethiopia’s leather export performance and comparative advantages using Food and Agriculture OrganizationAdopting Sustainable Business Model Innovation (SBMI) capabilities empowers businesses to compete at a higher level, driving economic growth, enhancing social well-being, and promoting environmental responsibility. By embracing SBMI, Ethiopian manufacturing firms in the leather sector (EMF-in-LS) can continually evolve, challenge conventional methods, explore new revenue streams, and stay ahead of the curve in dynamic market environments. However, EMF-in-LS often struggle with global competitiveness and face challenges in sustainable business model innovation. This is primarily due to many pressing challenges including lack of capabilities and awareness concerning sustainable business model innovation, as manufacturing firm owners and managers are more focused on day-to-day operations and immediate profits. To address these challenges, it is crucial to raise awareness among EMF-in-LS about the importance of SBMI and develop SBMI framework that can enhance their SBMI capabilities. The main purpose of this dissertation is to develop a comprehensive sustainable business model innovation (SBMI) framework for EMF-in-LS, focusing on the sector's comparative advantages and systemic challenges and untapped opportunities in global competitiveness and sustainability.
The research was conducted in Addis Ababa, Ethiopia, chosen for its concentration of leather manufacturing firms and accessibility to key stakeholders. A mixed-methods approach was used to capture comprehensive insights, targeting all the 225 registered, export-oriented Ethiopian leather manufacturing firms, including 34 tanneries, 37 footwear manufacturers, and 154 leather article producers. This crucial sector was selected as it drives employment, exports, and growth in Ethiopia. Purposive sampling was employed to collect both primary and secondary data, which was analyzed using appropriate tools and techniques which have been thoroughly discussed inside this PhD dissertation.
This dissertation presents a validated Sustainable Business Model Innovation (SBMI) framework tailored for Ethiopian manufacturing firms in the leather sector (EMF-in-LS), developed through three empirical studies, each addressing a set of specific objectives of this PhD research.
To address the first objective and inform the development of the Sustainable Business Model Innovation (SBMI) framework, the Empirical study I of this PhD study examines Ethiopia’s leather export performance and comparative advantages using Food and Agriculture Organization(FAO)stat and International Trade Center (ITC) trade data. By applying the Revealed Comparative Advantage (RCA) index and Constant Market Share (CMS) analysis, the study reveals a decline in Ethiopia’s comparative advantage in raw hides and skins (RHS) alongside steady growth in leather articles and fluctuating footwear exports revealing systemic competitiveness challenges that demand strategic intervention. Complementing this quantitative assessment, a comprehensive methodology integrating thematic literature analysis, sector analysis using the Porter’s Diamond Model, semi-structured interviews, and a business model evaluation of a typical firm in EMF-in-LS identifies critical challenges and opportunities shaping the sector’s future.
Additionally, to complete the first objective and deepen insights into the Sustainable Business Model Innovation (SBMI) framework, empirical study I of this PhD Study explores the contribution of Total Productive Maintenance (TPM) to operational excellence within Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS). The study identifies Focused Improvement (FI), Quality Maintenance (QM), and Education & Training (EduT) as pivotal enablers of Overall Equipment Effectiveness (OEE). Based on descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that TPM implementation remains at a nascent stage, falling short of the internationally recognized OEE benchmark of 85%. The findings offer empirical validation of the interconnectedness between TPM practices, OEE, and operational performance, providing actionable insights that informed the development of the SBMI framework tailored to EMF-in-LS.
To fulfill the second objective and extend insights for shaping the Sustainable Business Model Innovation (SBMI) framework, Empirical Study II of this PhD dissertation investigates Ethiopian consumers’ online purchasing behavior through Partial Least Squares Structural Equation Modeling (PLS-SEM). The study identifies Perceived Ease of Use, Subjective Norms, Perceived Usefulness, Website Design, and Trust as significant determinants of purchase intention, thereby elucidating critical drivers of digital engagement. Grounded in the Technology Acceptance Model (TAM), the Theory of Planned Behavior (TPB), and supporting literature, the analysis enriches contextual understanding of consumer behavior within emerging markets.
For Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), these findings underscore the strategic relevance of intuitive website interfaces, transparent product information, and(FAO)stat and International Trade Center (ITC) trade data. By applying the Revealed Comparative Advantage (RCA) index and Constant Market Share (CMS) analysis, the study reveals a decline in Ethiopia’s comparative advantage in raw hides and skins (RHS) alongside steady growth in leather articles and fluctuating footwear exports revealing systemic competitiveness challenges that demand strategic intervention. Complementing this quantitative assessment, a comprehensive methodology integrating thematic literature analysis, sector analysis using the Porter’s Diamond Model, semi-structured interviews, and a business model evaluation of a typical firm in EMF-in-LS identifies critical challenges and opportunities shaping the sector’s future.
Additionally, to complete the first objective and deepen insights into the Sustainable Business Model Innovation (SBMI) framework, empirical study I of this PhD Study explores the contribution of Total Productive Maintenance (TPM) to operational excellence within Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS). The study identifies Focused Improvement (FI), Quality Maintenance (QM), and Education & Training (EduT) as pivotal enablers of Overall Equipment Effectiveness (OEE). Based on descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that TPM implementation remains at a nascent stage, falling short of the internationally recognized OEE benchmark of 85%. The findings offer empirical validation of the interconnectedness between TPM practices, OEE, and operational performance, providing actionable insights that informed the development of the SBMI framework tailored to EMF-in-LS.
To fulfill the second objective and extend insights for shaping the Sustainable Business Model Innovation (SBMI) framework, Empirical Study II of this PhD dissertation investigates Ethiopian consumers’ online purchasing behavior through Partial Least Squares Structural Equation Modeling (PLS-SEM). The study identifies Perceived Ease of Use, Subjective Norms, Perceived Usefulness, Website Design, and Trust as significant determinants of purchase intention, thereby elucidating critical drivers of digital engagement. Grounded in the Technology Acceptance Model (TAM), the Theory of Planned Behavior (TPB), and supporting literature, the analysis enriches contextual understanding of consumer behavior within emerging markets.
For Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), these findings underscore the strategic relevance of intuitive website interfaces, transparent product information, and(FAO)stat and International Trade Center (ITC) trade data. By applying the Revealed Comparative Advantage (RCA) index and Constant Market Share (CMS) analysis, the study reveals a decline in Ethiopia’s comparative advantage in raw hides and skins (RHS) alongside steady growth in leather articles and fluctuating footwear exports revealing systemic competitiveness challenges that demand strategic intervention. Complementing this quantitative assessment, a comprehensive methodology integrating thematic literature analysis, sector analysis using the Porter’s Diamond Model, semi-structured interviews, and a business model evaluation of a typical firm in EMF-in-LS identifies critical challenges and opportunities shaping the sector’s future.
Additionally, to complete the first objective and deepen insights into the Sustainable Business Model Innovation (SBMI) framework, empirical study I of this PhD Study explores the contribution of Total Productive Maintenance (TPM) to operational excellence within Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS). The study identifies Focused Improvement (FI), Quality Maintenance (QM), and Education & Training (EduT) as pivotal enablers of Overall Equipment Effectiveness (OEE). Based on descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that TPM implementation remains at a nascent stage, falling short of the internationally recognized OEE benchmark of 85%. The findings offer empirical validation of the interconnectedness between TPM practices, OEE, and operational performance, providing actionable insights that informed the development of the SBMI framework tailored to EMF-in-LS.
To fulfill the second objective and extend insights for shaping the Sustainable Business Model Innovation (SBMI) framework, Empirical Study II of this PhD dissertation investigates Ethiopian consumers’ online purchasing behavior through Partial Least Squares Structural Equation Modeling (PLS-SEM). The study identifies Perceived Ease of Use, Subjective Norms, Perceived Usefulness, Website Design, and Trust as significant determinants of purchase intention, thereby elucidating critical drivers of digital engagement. Grounded in the Technology Acceptance Model (TAM), the Theory of Planned Behavior (TPB), and supporting literature, the analysis enriches contextual understanding of consumer behavior within emerging markets.
For Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), these findings underscore the strategic relevance of intuitive website interfaces, transparent product information, and(FAO)stat and International Trade Center (ITC) trade data. By applying the Revealed Comparative Advantage (RCA) index and Constant Market Share (CMS) analysis, the study reveals a decline in Ethiopia’s comparative advantage in raw hides and skins (RHS) alongside steady growth in leather articles and fluctuating footwear exports revealing systemic competitiveness challenges that demand strategic intervention. Complementing this quantitative assessment, a comprehensive methodology integrating thematic literature analysis, sector analysis using the Porter’s Diamond Model, semi-structured interviews, and a business model evaluation of a typical firm in EMF-in-LS identifies critical challenges and opportunities shaping the sector’s future.
Additionally, to complete the first objective and deepen insights into the Sustainable Business Model Innovation (SBMI) framework, empirical study I of this PhD Study explores the contribution of Total Productive Maintenance (TPM) to operational excellence within Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS). The study identifies Focused Improvement (FI), Quality Maintenance (QM), and Education & Training (EduT) as pivotal enablers of Overall Equipment Effectiveness (OEE). Based on descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that TPM implementation remains at a nascent stage, falling short of the internationally recognized OEE benchmark of 85%. The findings offer empirical validation of the interconnectedness between TPM practices, OEE, and operational performance, providing actionable insights that informed the development of the SBMI framework tailored to EMF-in-LS.
To fulfill the second objective and extend insights for shaping the Sustainable Business Model Innovation (SBMI) framework, Empirical Study II of this PhD dissertation investigates Ethiopian consumers’ online purchasing behavior through Partial Least Squares Structural Equation Modeling (PLS-SEM). The study identifies Perceived Ease of Use, Subjective Norms, Perceived Usefulness, Website Design, and Trust as significant determinants of purchase intention, thereby elucidating critical drivers of digital engagement. Grounded in the Technology Acceptance Model (TAM), the Theory of Planned Behavior (TPB), and supporting literature, the analysis enriches contextual understanding of consumer behavior within emerging markets.
For Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), these findings underscore the strategic relevance of intuitive website interfaces, transparent product information, and(FAO)stat and International Trade Center (ITC) trade data. By applying the Revealed Comparative Advantage (RCA) index and Constant Market Share (CMS) analysis, the study reveals a decline in Ethiopia’s comparative advantage in raw hides and skins (RHS) alongside steady growth in leather articles and fluctuating footwear exports revealing systemic competitiveness challenges that demand strategic intervention. Complementing this quantitative assessment, a comprehensive methodology integrating thematic literature analysis, sector analysis using the Porter’s Diamond Model, semi-structured interviews, and a business model evaluation of a typical firm in EMF-in-LS identifies critical challenges and opportunities shaping the sector’s future.
Additionally, to complete the first objective and deepen insights into the Sustainable Business Model Innovation (SBMI) framework, empirical study I of this PhD Study explores the contribution of Total Productive Maintenance (TPM) to operational excellence within Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS). The study identifies Focused Improvement (FI), Quality Maintenance (QM), and Education & Training (EduT) as pivotal enablers of Overall Equipment Effectiveness (OEE). Based on descriptive statistics and Partial Least Squares Structural Equation Modeling (PLS-SEM), the results show that TPM implementation remains at a nascent stage, falling short of the internationally recognized OEE benchmark of 85%. The findings offer empirical validation of the interconnectedness between TPM practices, OEE, and operational performance, providing actionable insights that informed the development of the SBMI framework tailored to EMF-in-LS.
To fulfill the second objective and extend insights for shaping the Sustainable Business Model Innovation (SBMI) framework, Empirical Study II of this PhD dissertation investigates Ethiopian consumers’ online purchasing behavior through Partial Least Squares Structural Equation Modeling (PLS-SEM). The study identifies Perceived Ease of Use, Subjective Norms, Perceived Usefulness, Website Design, and Trust as significant determinants of purchase intention, thereby elucidating critical drivers of digital engagement. Grounded in the Technology Acceptance Model (TAM), the Theory of Planned Behavior (TPB), and supporting literature, the analysis enriches contextual understanding of consumer behavior within emerging markets.
For Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), these findings underscore the strategic relevance of intuitive website interfaces, transparent product information, andcredible customer reviews. Moreover, the influence of social norms and sustained platform value emerges as pivotal for fostering trust and enhancing customer retention. Collectively, these insights provide actionable implications that strengthen the design and relevance of the SBMI framework tailored to EMF-in-LS.
To address the third objective and strengthen the foundation of the Sustainable Business Model Innovation (SBMI) framework, Empirical Study III of this PhD dissertation comprises two interconnected inquiries. The first entails a rigorous thematic analysis of existing literature, which identifies ten critical success factors (CSFs) and eleven barriers to SBMI, each categorized under four overarching themes. This synthesis provides a comprehensive empirical mapping of the enablers and challenges, offering a structured lens to examine prior SBMI implementations and inform future applications.
The second dimension of Empirical Study III empirically investigates the relationship between key business model innovation (BMI) drivers and firm performance (FP). The study reveals that dynamic capabilities (DC), digital capabilities (DigC), and the business environment (BE) significantly foster BMI. Moreover, DC, BE, and BMI exhibit positive impacts on FP, whereas strategic agility (SA) presents a counterintuitive negative association, signaling the need for deeper inquiry. Innovation Capability (IC) and DigC display marginal effects, suggesting potential areas for strategic enhancement.
By integrating insights from dynamic capability theory and the resource-based view (RBV), the study underscores the necessity of cultivating both dynamic and digital capabilities to navigate evolving market conditions, regulatory landscapes, and technological disruptions. Ultimately, SBMI emerges as a strategic imperative for Ethiopian Manufacturing Firms in the Leather Sector (EMF-in-LS), advancing resilience, global competitiveness, and long-term sustainability.
Finally, this dissertation synthesizes the insights drawn from the three interrelated empirical studies to propose a novel and comprehensive Sustainable Business Model Innovation (SBMI) framework, tailored to enhance the SBMI capabilities of Ethiopian Manufacturing Firms in the Leather Sector (EMF-iLS).
Validated through rigorous empirical evidence, subject matter experts and practitioner evaluations, the proposed framework significantly advances the conceptual and practical understanding of SBMI within emerging market contexts. It delivers actionable guidance to EMF-in-LS striving to transform their business models for greater sustainability, equips policymakers with evidence-based directions for regulatory support, and facilitates collaboration among industry stakeholders toward achieving sustainable industrial development aligned with the United Nations Sustainable Development Goals (SDGs).
Grounded in dynamic capability, RBV, TAM, and TPB, the proposed SBMI framework emerges as a transformative model for EMF-in-LS enhancing strategic resilience, fostering sustainable business model innovation, and informing policy alignment with national competitiveness goals. Its uniqueness lies in the integration of multi-theoretical perspectives with contextual empirical insights, delivering a flexible, stakeholder-inclusive, and scalability-oriented tool tailored for emerging market firms specific in EMF-in-LS operating within sustainability-sensitive industry
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Keywords
Business Model (BM), Business Model Innovation (BMI), Comparative advantage, Dynamic Capabilities (DC), Emerging markets, Ethiopian Manufacturing firms in the leather sector (EMF-in-LS), Global Competitiveness, Sustainable Business Model Innovation (SBMI