Export and Import Knowledge as Drivers of Technological Innovation and Firm Performance: Evidence from Ethiopian SMEs

Abstract

The main focus of this research is to analyze the influence of two major constructs of export and import knowledge on technological innovation and firm performance of among Small and Medium Enterprises (SMEs) in Ethiopia. In this study two theoretical views KBV and RBV has been considered. The research fully utilized the quantitative approach and the data was collected through structural questionnaire to 331 SMEs located in Addis Ababa, Ethiopia. The data were analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The findings of the study indicates that both export and import knowledge significantly influence technological innovation and firm performance. The result shows that the most significant predictor of performance was technological innovation so it confirming in translating international knowledge into competitive advantage. According to the mediation analysis technological innovation is partially mediates the relationships between export and import knowledge and firm performance which indicating that knowledge acquired from international operation leads to superior results primarily through innovation activities. With R² = 0.421 for performance and 0.178 for innovation, the structural model shows substantial explanatory power and with Q² = 0.288 for performance and 0.114 for innovation, the model also shows considerable predictive relevance. However, the study used cross sectional design, depend on self-reported data, and utilized data from one city limit the ability to draw causal inferences and
to generalize the findings. It is recommended that future research uses the longitudinal design and an objective performance measure, and cover a wide range of SMEs sectors and regional areas.