Abstract
Despite the fierce competition in the business environment, firms accept relatively low innovative solutions in their daily activities and consequently lose competitive advantage, experience creeping growth at a snail's pace directly associated with the firm's inadequate finance and eventual collapse. This study examined the interrelationship between access to finance, innovation, and competitive advantage. Premised on the study findings, results revealed that innovation is an all-important strategy that differentiates the products and services of business firms and consequently sustaining competitive advantage. The results suggest that adequate financing can be a mechanism by which innovation and competitive advantage positively relate to increased performance. The strength between these variables would be heightened as access to finance increased. It was further established that firms with encouraging innovative culture would gain rare core competencies and maintain the position of the market leader while sustaining competitive advantage. Based on these findings, the study recommends that business firms conduct market surveys to determine the need of current and prospective customers. Management should prioritize, invest heavily in research and development, and the government should strive to provide adequate financial support, infrastructural facilities, and incentives for business operations.
Highlights
Innovation is an all-important influence of growth, competitiveness, profitability, and sustainable delivery of value-added products and services [1]
Existing nexus of financing, innovation, and competitive advantage exists in the expectation that firms must efficiently use their resources in an approach that demonstrates adequate innovations aimed at reaching competitive advantage [55]
This study examined the interrelationship between access to finance, innovation, and competitive advantage
Summary
Innovation is an all-important influence of growth, competitiveness, profitability, and sustainable delivery of value-added products and services [1]. Debt and equity (or certain hybrid forms), private investors (such as business angels), investment firms, banks, and financial markets (among others), comprises external sources of funding. This study contributes to the existing works of literature on financing, innovation, and competitive advantage, by analyzing the importance of adequate financial access in enhancing firms’ performance as well as encourage investment in innovation, motivate firms to perform research, implement appropriate technology for development projects to increase competitive advantage and the need for firms to understand the benefits that can be brought to them from innovation, as this would guarantee organizational productivity, profitability in a bid to achieve a sustainable going concern. The research robustly demonstrates the moderating effect of financing on the relationship between innovation and competitive advantage as a fulcrum for the entrepreneurial firm’s growth and sustainability in a competitive business environment [29]
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