Innovation capability, strategic flexibility and SME performance: the roles of competitive advantage and competitive intensity
African Journal of Economic and Management Studies
ISSN: 2040-0705
Article publication date: 26 January 2024
Issue publication date: 24 June 2024
Abstract
Purpose
This study aims to explore the mediating role of competitive advantage and the moderating role of competitive intensity in the relationship between innovation capability (IC) and small and medium-sized enterprise (SME) performance and between strategic flexibility (SF) and SME performance.
Design/methodology/approach
The study adopted a survey research design. The data were collected from a conveniently selected sample of 159 SMEs in Nigeria using a self-reported questionnaire. Mediation and moderation analyses were performed using Hayes' PROCESS macro v3.
Findings
Results showed that IC and SF positively affect SME performance. Also, competitive advantage significantly mediates the relationship between IC and SME performance and between SF and SME performance. Additionally, competitive intensity positively and significantly moderates the relationship between IC and SME performance but fails to significantly moderate the relationship between SF and SME performance.
Practical implications
The findings have managerial implications for SME owners and managers. The findings suggest the need for SMEs to develop more IC and increase their SF. Thus, SME owners and managers should invest more in developing IC and SF. More specifically, they should invest more in research and development, the development of intellectual capital (consisting of human capital, structural capital and relational capital) and new technologies, products, services and processes. Also, they should nurture an innovation culture, encourage creative and innovative acts and allow employees to experiment with new ideas without hindrances.
Originality/value
To the best of the author’s knowledge, this study is the first to provide empirical evidence of the mediating role of competitive advantage and the moderating role of competitive intensity in the relationship between IC and SME performance and between SF and SME performance in the context of emerging economies such as Nigeria. The study validates dynamic capabilities theory by demonstrating that IC and SF are dynamic capabilities that give SMEs a competitive advantage and enhance their performance.
Keywords
Acknowledgements
The author is indebted to the editor and the anonymous reviewers for their valuable comments and suggestions. This research received no specific grant from any agency in the public, commercial, or not-for-profit sectors.
Citation
Otache, I. (2024), "Innovation capability, strategic flexibility and SME performance: the roles of competitive advantage and competitive intensity", African Journal of Economic and Management Studies, Vol. 15 No. 2, pp. 248-262. https://doi.org/10.1108/AJEMS-06-2023-0221
Publisher
:Emerald Publishing Limited
Copyright © 2024, Emerald Publishing Limited