Effect of Technological and Product Innovation Practices on Firm Performance: The Mediating Role of Government Support Programs in SMEs in Ethiopia, Analyzed Through BSC Framework

Abstract

This study examines the impact of technology and product innovation on the performance of Ethiopian SMEs, with a focus on the mediating role of government assistance initiatives. 431 SME owner/managers in Addis Ababa participated in a quantitative, cross-sectional survey design that used standardized, closed-ended questionnaires, multi-stage sampling, and systematic random sampling to gather primary data. For descriptive and inferential statistics, data analysis was conducted using SPSS Version 26. Structural equation modeling (SEM) was enabled by AMOS software Version 26 to investigate the suggested associations. The results indicate that corporate performance is significantly improved by both technological and product enhancements (β = 0.395, p < 0.001, and β = 0.428, p < 0.001, respectively), with government support serving as a stimulant that partially mediates these interactions. This research combines viewpoints from the Resource-Based View, Innovation Diffusion Theory, Stakeholder Theory, and the Balanced Scorecard to offer a thorough comprehension of performance and innovation in a developing economy. To better understand the contextual factors influencing innovation, future research should focus on qualitative insights, industry-specific nuances, and longitudinal effects. This will provide policymakers and SME managers with useful guidance on how to promote sustainable growth through targeted support systems.