The nexus between R&D, innovation and profitability of indigenous oil firms: A structural equilibrium model approach

Abstract

This study examined the nexus between research and development (R&D), innovation and profitability of indigenous oil firms in Nigeria. The factors were categorised into four constructs and the causal relationship among the constructs were established. Structural equation model technique was adopted to test the hypotheses formulated. The results revealed that R&D has a positive and significant impact on technological and non-technological innovations and firms' profitability. Each of the technological and non-technological innovation also has positive and significant impact on profitability. The indirect effects of R&D on profitability through technological and non-technological innovations are also positive though it was higher for technological innovation than non-technological innovation. These results imply that investment in R&D, technological and non-technological innovations should be combined to optimise the indigenous oil firms' profitability as against many firms that chose either of them leaving the other two.