Innovative capability, strategic goals and financial performance of SMEs in Ghana

Abstract

Purpose This paper aims to investigate the moderating role of innovation capability and strategic goals in the financial performance of small- and medium-scale enterprises (SMEs) in Ghana. Design/methodology/approach Innovative capabilities and strategic goals in SMEs and their influence on financial performance were recognized and briefly debated according to the existing literature. Hypotheses were tested on research data on 340 SMEs in Ghana, which were conveniently selected. Finally, quantitative analysis was done, followed by a discussion of the research findings. Findings Results from the study have proved that strategic goals have a strong positive relationship with financial performance. Also, there is a strong, positive and highly significant impact innovative capacity has on financial performance. Finally, the study found that innovative capability moderates the relationship between strategic goals and financial performance. It showed that at high levels of innovative capacity, high levels of strategic goals boost financial performance massively. Research limitations/implications The findings are limited to SMEs in Ghana. Researchers should study why SMEs may not pursue any innovation capability activities as they have positive impact on their financial performance. They may also focus on strategic goals and financial performance. Practical implications The study shows a necessity for longer-term innovation perspectives and a higher level of the importance of the application and assessment of strategic goals. Business owners and caretakers need greater awareness about the importance of innovation capability and strategic goals and their influence on the overall financial performance of SMEs. This will help them to adopt right innovate procedures for their businesses. Originality/value One of few research works to examine innovation capability and strategic goals on the financial performance of SMEs in a developing country.