article · African Journal of Economic and Management Studies
This research investigates how innovation capability and strategic flexibility influence the performance of small and medium-sized enterprises in Nigeria. Based on survey responses from 159 firms, the analysis demonstrates that both innovation capability and strategic flexibility directly enhance business performance. Furthermore, competitive advantage serves as a vital bridge, mediating the positive effects of both capabilities on enterprise outcomes. Market competitive intensity notably strengthens the performance gains driven by innovation capability, although it does not significantly affect the link between strategic flexibility and performance. To capitalise on these dynamics, businesses are encouraged to invest systematically in research and development, intellectual capital, and modern technologies, while establishing an internal workplace culture that actively supports experimentation and creative problem-solving.
Understanding how small enterprises navigate competitive markets is critical for economic growth. This research shows that investing in adaptable strategies and internal innovation yields tangible performance gains. For business leaders and economic planners, it reinforces the principle that cultivating workplace creativity and technical capabilities is essential to building resilient, competitive firms in emerging economies.
The findings offer immediately applicable managerial guidance for SME owners, executives, and enterprise development agencies. Rather than presenting a tangible technology product, the work provides an operational framework for strategic investment in research and development, intellectual capital, and process modernisation. Because it translates directly into executive decision-making and resource allocation, this guidance is already at an applied, ready-to-implement stage for commercial organisations.
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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.
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DOI: 10.1108/ajems-06-2023-0221
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