Abstract
Purpose: The purpose of this paper is to examine the mediating effect of human capital on the relation between the strategic innovation and competitive advantage of SMEs in Yemen.Methodology/Approach: The PLS-SEM analysis is performed to test the hypotheses by using data collected from 238 SMEs in Yemen. The results support the hypotheses.Findings: The results of the PLS-SEM analysis are as follows: strategic innovation had a significant effects on SMEs’ competitive advantage; also human capital had a significant effects on SMEs’ competitive advantage; human capital mediated the effect of strategic innovation on competitive advantage; and strategic innovation had a positive and significant effect on human capital.Research Limitation/Implication: The population of the study was limited to manufacturing SMEs, so the results cannot be generalized to other types of industry such as services, whose structure and vision differ from those of manufacturing companies.Originality/Value of paper: The paper is one of the first to highlight human capital as a mediator between strategic innovation and competitive advantage of manufacturing SMEs in Yemen and the Middle East, describing a single study applied in the context of a developing country.
Highlights
In today’s rapidly changing business environment, firms need to be innovative in order to remain competitive (Edeh, Obodoechi and Ramos-Hidalgo, 2020; Sabahi and Parast, 2020; Popa, Soto-Acosta and Martinez-Conesa, 2017)
Manufacturing firms seek to enhance their competitive position by improving their responsiveness to market changes and competitors; it is essential to ensure that they have new technology and respond to the needs of their customers
Human capital forms the heart of knowledge, applied experience, technology and customer relationships in the organization, where specific professional skills furnish the required competitive advantage
Summary
In today’s rapidly changing business environment, firms need to be innovative in order to remain competitive (Edeh, Obodoechi and Ramos-Hidalgo, 2020; Sabahi and Parast, 2020; Popa, Soto-Acosta and Martinez-Conesa, 2017). According to Sisodia, Wolfe and Sheth (2003), organizations must struggle to survive in a capitalistic society and generate some tangible profit. They added that companies must have some competitive edge over their counterparts to enjoy high profits. Intense competition and the implementation of new technologies, the business environment has become more complex with the passage of time (Soosay et al, 2016)
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