THE EFFECT OF STRATEGIC ORIENTATION ON INNOVATIVE PERFORMANCE: THE MEDIATING ROLE OF OPEN INNOVATION AND FINANCIAL MANAGEMENT PRACTICE, A STUDY OF SMALL AND MEDIUM-SIZED ENTERPRISES IN ETHIOPIA

The focus of this study was to analyze empirically the mediating role of open innovation and financial management practice on the relationship between a SME’s strategic orientation and innovative performance. To test the posited hypotheses, a cross-sectional field survey quantitative approach was used. Based on the empirical data of 364 SMEs operating in study area, the study was employed structural equation modeling (SEM) to analyze the data and research hypotheses in the proposed structural regression model. The SEM analysis revealed that the higher-level strategic orientation of small and medium enterprise is the higher innovative performance. Finally, the results indicated that open innovation and financial management practice mediated the path between strategic orientation and innovative performance. Moreover, the study indicated that strategic orientation create value through open innovation, integration and efficient utilization of resources thus have an indirect impact on SMEs innovative performance.