The Effect of Strategic Innovation on Firm Performance: Evidence From Small Medium Sized-Enterprises in Selected Towns of Sheger Zuria and East Shewa, Ethiopia

Abstract

Strategic innovation do need to make change goods & services they sell to their customer value, nor technologies that support these product to be successful in organization and this types of innovation is highly essential for organization to adapt the speed of technology and rapidly change in industry. This study aimed to examine the effect of strategic innovation on the performance of SMEs in selected Oromia regional state in Finfinnee Zuria and East Shewa, Ethiopia. The target population of the study was 19,709 SMEs of firms in Bole Lemi IP, and Adama IP cluster, number respondents provided from Finfinnee zuria and East Shewa, Oromia, Ethiopia SMEs data during collected 2024. Data were drawn and collected from a sample of 392 from textile and manufacturing industry, using the quantitative, cross-sectional and primary data collected from Textile and Apparel manufacturing industry, in Oromia Regional state selected from Bole Lemi IP and in Adama IP cluster, located From Finfinnee Zuria and East Shewa. The study was adopted descriptive study of Demographic information and explanatory and inferential research designs, and to use correlation analyses and multiple linear regression data analysis to evaluate the influence of strategic innovation with firm performance in SMEs. The regression coefficient results revealed that Alignment, Human Capital, customer insights and Tec. Capabilities has positively influenced with firm performance in SMEs, respectively.

However, strategic alignment has a Medium Relationship with Firm performance in SMEs, Human Capital and Technological Capabilities has a Strong relationship with Firm Performance in SMEs and Customer insight has Very strong relationship with Firm performance in SMEs has respectively and it has supported to increase have better performance in textile and apparel manufacturing industry in the study area.