Mediation Effect of Human Capital Among Strategic Innovation and Competitive Advantage: A Case of SMEs in EthiopiaMediation Effect of Human Capital Among Strategic InnovationT. Niguse, B. Borji

The primary objective of this study was to examine the relationship between strategic innovation, human capital, and competitive advantage among SMEs in Ethiopia. Both primary and secondary data were used in this study. Using non-probability, particularly convenience sampling technique, the researchers selected 384 respondents from 940 SMEs operating in Sidama Regional state, Ethiopia. The data collected by structured questionnaire were analyzed by SEM with the help of EFA and CFA. SPSS and AMOS version 23 were used to analyze data. According to the findings of this study, strategic innovation had no influences on competitive advantage. However, strategic innovation affects competitive advantage through human capital which underscores the role of human capital in leveraging strategic innovation for competitive gains. Overall, the total influence of 0.68 indicates that strategic innovation significantly impacts competitive advantage totally through human capital. Furthermore, this study revealed that human capital plays a full mediating role in this connection, suggesting that businesses that successfully use strategic innovation are more likely to invest on human capital that improve their competitiveness and position of the firm at market place.