The contribution of innovation capabilities to business performance in state owned enterprises in South Africa

Abstract

State owned enterprises (SOEs) form one of the largest sectors within the economy in many countries and are important contributors to national development. They globally make up a greater part of the national gross domestic product (GDP). However, the performance of most SOEs in developing countries, such as South Africa, is substandard, prompting practitioners and researchers to continue searching for lasting solutions. The aim of this study was to investigate the contribution of innovation capabilities to market and business performance in SOEs in South Africa. The study followed a quantitative survey research method. A self-completion questionnaire was distributed to a purposive sample of 278 professional employees and managers in a selected South African SOE who were based in three provinces, namely, Gauteng, North-West and the Free State provinces. The collected data were analysed using the Statistical Packages for the Social Sciences (SPSS version 25.0) and Analysis of Moment Structures (AMOS version 25.0). The techniques used to analyse the data include descriptive statistics, exploratory factor analysis, and structural equation modelling to test the hypotheses. Out of the seven hypotheses tested in this study, six were accepted. Innovative strategy, market innovation and technological innovation all significantly predicted market competitiveness. Market competitiveness significantly predicted three business performance dimensions, namely, environmental, financial, and operational. The study proposes a unique model for managing the contribution of innovation capabilities to business performance in SOEs in South Africa. Theoretically, the study contributes to the existing body of knowledge since it is an addition to the available literature on innovation capabilities and performance of SOEs. Practically, in the study for the optimisation of market competitiveness and business performance, in SOEs, emphasis should be placed on understanding and considering the appropriate innovation capabilities as input factors.