Investigating the Performance of Manufacturing and Service Firms in Ghana: The Role of Financial Access and Firm Innovation
Date
2019-07
Authors
Journal Title
Journal ISSN
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Publisher
University of Ghana
Abstract
Despite the vast and growing empirical literature focusing on the association between innovation,
financial access and firm performance, the combined impact of these factors in one study is dearth
even though this relationship seems to be important, especially for developing countries. In this
research, a conceptual model is developed applying the Resource-Based-View (RBV) theory of
the firm to carry out an in-depth analysis of whether firm performance is affected by financial
access, and to ascertain, whether innovation mediates this relationship. Firm performance,
financial access and innovation are measured by sales growth, the ability of a firm to be given a
credit facility, and to offer a new service or product to the competitive market, respectively. The
study also controls for firm specific factors (firm foreign affiliation, age, size, and sector type) that
may affect firm performance. A dataset from Ghana 2013 Enterprise Survey (ES) put together by
World Bank will be used. Using OLS regression techniques, the findings suggest that innovation
and financial access are important for performance of firms in Ghana. Also, our findings unearth
that specific combinations of financial access with innovation have profound effects on the growth
of firms. In particular, the mediating effect of innovation implies an association between financial
access and firm performance. Furthermore, the findings indicate that service firms experience a
faster growth rate compared to manufacturing firms. Moreover, it is realized that firm size and
foreign affiliation affect performance positively, while firm age has a very negligible effect on
firm performance. Given, the important roles of financial access and innovation in boosting firm
level performance, it is essential for government to take advantage of them when formulating firm
performance policies in Ghana.
Description
MBA.
Keywords
Manufacturing and Service Firms, Ghana, Financial Access, Firm Innovation