Analyzing the Mediating Role of Government Support using the Balanced Scorecard: Examining the Effect of Marketing and Technological Innovation on Firm Performance in Addis Ababa, Ethiopia

Analyzing the Mediating Role of Government Support using the Balanced Scorecard

Abstract

This study looks into how marketing and technology advancements affect SMEs' performance in Addis Ababa, Ethiopia, with an emphasis on how government support acts as a mediator. It attempts to fill in important knowledge gaps about the difficulties SMEs in developing nations face. Using a multi-stage cluster sampling technique for representativeness and a structured questionnaire to gather data from 431 SMEs, a quantitative approach was adopted. Confirmatory factor analysis (CFA) and exploratory factor analysis (EFA) were used in the data analysis, and structural equation modeling (SEM) in AMOS was the next step. The findings indicate that both marketing and technology innovation (β = 0.180 and 0.285, respectively) greatly improve firm performance. Both innovations' effects are amplified by government backing, which acts as a partial mediator and has a high direct impact (β = 0.318). In order to get the best results, SMEs in Addis Ababa should use government assistance programs, which offer crucial resources for firm expansion, in conjunction with technology and marketing innovations.  The cross-sectional methodology of the study, which only uses data from owner-managers, restricts the ability to draw long-term causal conclusions. Employee participation in future studies may lessen bias and increase the validity of the results, giving them greater plausibility. Future research should expand to other regions and use longitudinal designs to investigate causal pathways for enhanced validity. Qualitative studies could clarify how government assistance fosters innovation and identifies obstacles for SMEs, while also exploring mediators like management skills and digital literacy.