Effect of Marketing and Technological Innovation Practices on Firm Performance The Mediating Role of Government Support in SMEs in Addis Ababa, Ethiopia, Analyzed Through BSC Framework

Abstract

This study looks at how marketing and technological innovation affect small and medium-sized enterprise (SME) performance in Addis Ababa, Ethiopia. It emphasizes government support as an important external resource in the Resource-Based View (RBV), an active institutional enabler, a crucial Balanced Scorecard (BSC) antecedent for performance in developing economies, and an accelerator in the Diffusion of Innovations (DOI) theory. It fills up important knowledge gaps about the difficulties faced by SMEs in emerging nations. Using a quantitative methodology, the study collected data from 431 SMEs using structured questionnaires, multi-stage cluster sampling, and systematic random procedures for representativeness. Exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM) in AMOS were used in the data analysis. The results show that technological innovation (β = 0.285) and marketing innovation (β = 0.180) both greatly improve business performance. Government support has a substantial direct influence (β = 0.318) and somewhat mediates these linkages to increase their effects. For best outcomes, SMEs in Addis Ababa should combine these innovations with government initiatives that supply necessary resources for growth. The cross-sectional methodology and dependence on owner-manager data are limitations that limit long-term causal conclusions. Future research could use qualitative methods to investigate how government support promotes innovation, identifies SME barriers, and looks at mediators like management skills and digital literacy. It could also expand to other regions with longitudinal designs for causal validity and include employee perspectives to lessen bias.