Does Innovative Capability Really Matter for the Profitability of Consumer Goods Companies in Developing Economies? Download PDF

Journal Name : SunText Review of Economics & Business

DOI : 10.51737/2766-4775.2023.091

Article Type : Research Article

Authors : Olasoji OT and Akpa VO

Keywords : Competitive advantage; FMCG; Innovative strategies; Organizational performance


There has been a gradual change in consumer behaviour, and the business landscape with respect to buying practices, firm behaviour, distribution, and supply chain management, largely induced by COVID-19 in Africa. For businesses, low profitability, poor sales, and weak market share, including intense competition, are widespread within the business ecosystem and innovative strategy and technological change are some of the business decisions in recent times. The study therefore examined the effects of innovative capability on the profitability of selected consumer goods companies listed in Nigeria the most populous and largest economy in Africa. The study adopted a survey research design, with a population of 22,466 staff comprising regular employees, and top and middle-level managers of twenty consumer goods companies listed on the Nigeria Exchange Group (NGX). Seven (7) out of the twenty (20) listed consumer goods companies were selected from the population based on the capitalization criteria and consistent dividend payments filter. The Research Advisor Table was adopted in determining the sample size, which was given as 378 with a confidence level of 95% and a margin error of 5%. Due to non-response, adequate provision was considered and as a result, 113 which is 30% was added to arrive at a sample size of 491. The study used a proportionate stratified sampling technique to draw a convenient sample for the study. A total of 491 copies of the questionnaire were administered to the respondents with a response rate of 97.76%. Data collected were analyzed using descriptive and inferential statistics such as frequency distribution and percentage point and the hypothesis was analyzed with the use of regression analysis. Findings showed that innovative capability had a significant and positive effect on business profitability (? = 0.887, t = 29.633, P<0.05). The study concluded that competitive strategies with sub-variables innovative capabilities, diversification capabilities, differentiation capabilities, and cost leadership capabilities had positive effects on their corresponding sub-variables profitability, sales growth, customer satisfaction, and business growth under business outcomes. The study recommended that the consumer goods companies often refer to Fast Moving Consumer Goods (FMCG) listed in Nigeria must have a market-development mind-set, invest in consumer education, and integrate an efficient supply chain management model.