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Mediation Effect of Human Capital Among Strategic Innovation and Competitive Advantage: A Case of SMEs in Ethiopia

Author

Listed:
  • Tafese Niguse

    (Bule Hora University)

  • Brehanu Borji

    (Bule Hora University)

Abstract

The primary objective of this study was to examine the relationship between strategic innovation, human capital, and competitive advantage among SMEs in Ethiopia. Both primary and secondary data were used in this study. Using non-probability, particularly convenience sampling technique, the researchers selected 384 respondents from 940 SMEs operating in Sidama Regional state, Ethiopia. The data collected by structured questionnaire were analyzed by SEM with the help of EFA and CFA. SPSS and AMOS version 23 were used to analyze data. According to the findings of this study, strategic innovation had no influences on competitive advantage. However, strategic innovation affects competitive advantage through human capital which underscores the role of human capital in leveraging strategic innovation for competitive gains. Overall, the total influence of 0.68 indicates that strategic innovation significantly impacts competitive advantage totally through human capital. Furthermore, this study revealed that human capital plays a full mediating role in this connection, suggesting that businesses that successfully use strategic innovation are more likely to invest on human capital that improve their competitiveness and position of the firm at market place.

Suggested Citation

  • Tafese Niguse & Brehanu Borji, 2025. "Mediation Effect of Human Capital Among Strategic Innovation and Competitive Advantage: A Case of SMEs in Ethiopia," International Journal of Global Business and Competitiveness, Springer, vol. 20(1), pages 23-32, June.
    • Handle: RePEc:spr:ijogbc:v:20:y:2025:i:1:d:10.1007_s42943-025-00114-z
    DOI: 10.1007/s42943-025-00114-z
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    References listed on IDEAS

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    1. Chi, Maomao & Huang, Rui & George, Joey F., 2020. "Collaboration in demand-driven supply chain: Based on a perspective of governance and IT-business strategic alignment," International Journal of Information Management, Elsevier, vol. 52(C).
    2. Alhamzah Alnoor, 2020. "Human capital dimensions and firm performance, mediating role of knowledge management," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 20(2), pages 149-168.
    3. Krzysztof Borodako & Jadwiga Berbeka & Michał Rudnicki & Mariusz Łapczyński, 2023. "The impact of innovation orientation and knowledge management on business services performance moderated by technological readiness," European Journal of Innovation Management, Emerald Group Publishing Limited, vol. 26(7), pages 674-695, February.
    4. Aklilu Tukela Bekata & Chalchissa Amentie Kero, 2024. "Customer orientation, open innovation and enterprise performance, evidence from Ethiopian SMEs," Cogent Business & Management, Taylor & Francis Journals, vol. 11(1), pages 2320462-232, December.
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    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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