Digitization strategy and innovation performance of microfinance institutions: mediating role of innovation capability

Mekuanint Abera, Chetana Marvadi and Dilipkumar Suthar

Journal of Accounting & Organizational Change, 2024, vol. 21, issue 2, 250-277

Abstract: Purpose - This study aims to examine the mediating role of innovation capability in the relationship between digital transformation strategy and innovation performance of microfinance institutions in Ethiopia. Design/methodology/approach - Survey data were collected from 12 microfinance institutions in Ethiopia through self-administered questionnaires. Statistical analysis was conducted using structural equation modeling with AMOS and SPSS. Covariance-based structural equation modeling was used to test the study hypotheses. Findings - Digital transformation strategy indicators such as (digitization vision, information technology integration, information technology agility and flexibility of information technology) directly affect innovation performance. The innovation capability mediates the relationship between digital transformation strategy indicator (information technology agility) and innovation performance. However, innovation capability does not have mediation effect in the relationship between digital transformation strategy remaining indicators (digitization vision, information technology flexibility and information technology integration) and innovation performance. Originality/value - The study affirmed the importance of dynamic capability theory and presents noteworthy conclusions applicable to managers, stakeholders, and policymakers. It illuminates how innovation capability serves as a crucial link between digital transformation strategies and innovation performance within microfinance institutions in Ethiopia. This research enhances the current understanding of innovation capability, digital transformation strategy and innovation performance in the literature.

Keywords: Digital transformation; Information technology; Innovation performance; Innovation capability; M15; M21; N27 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaocpp:jaoc-12-2023-0241

DOI: 10.1108/JAOC-12-2023-0241

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