The Nexus between innovation and business competitive advantage: a conceptual study

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.