Moderating Effect of Dominant Logic on the Relationship between Innovation Capability and SMEs Performance in Abuja

Abstract

Performance of SMEs in today's dynamic business environment is crucial for the development of any economy. However, there are still obstacles hindering the expected optimal performance of the sector. The objective of this study therefore, is to examine the moderating role of dominant logic on the relationship between product innovation, marketing innovation and firm performance among SMEs in Three local governments (Abaji, AMAC and Kuje) in Abuja. A sample of 235 questionnaires was analyzed using Structural Equation Modelling. The result indicated that, in the direct relationship, Marketing Innovation and Dominant Logic have significant effect on SMEs performance, while the direct relationship between Product Innovation and Performance was found not to be significant. It was further found that Dominant Logic significantly moderates the relationship between Product Innovation and Firm Performance. On the other hand, Dominant Logic does not significantly moderate the relationship between Marketing Innovation and SMEs performance. The study therefore recommends that businesses should ensure managerial cognition are well defined and communicated at all levels, so as to improve product innovation. Also, there is need to emphasize the idea behind new trends so as to come up with a befitting marketing innovation that makes their business stand out by delivering quality service in the most cost effective manner which will in turn enhance their performance.