African Journal of Science, Technology, Innovation and Development ISSN: 2042-1338 (Print) 2042-1346 (Online) Journal homepage: https://www.tandfonline.com/loi/rajs20 The effect of innovation practices on agribusiness performance: A structural equation modelling (SEM) approach Evans Brako Ntiamoah, Dongmei Li & Daniel Bruce Sarpong To cite this article: Evans Brako Ntiamoah, Dongmei Li & Daniel Bruce Sarpong (2019): The effect of innovation practices on agribusiness performance: A structural equation modelling (SEM) approach, African Journal of Science, Technology, Innovation and Development, DOI: 10.1080/20421338.2019.1573958 To link to this article: https://doi.org/10.1080/20421338.2019.1573958 Published online: 31 Mar 2019. Submit your article to this journal Article views: 38 View Crossmark data Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=rajs20 African Journal of Science, Technology, Innovation and Development, 2019 https://doi.org/10.1080/20421338.2019.1573958 © 2019 African Journal of Science, Technology, Innovation and Development The effect of innovation practices on agribusiness performance: A structural equation modelling (SEM) approach Evans Brako Ntiamoah1*, Dongmei Li1 and Daniel Bruce Sarpong2 1College of Management, Sichuan Agricultural University, Chengdu City, People’s Republic of China 2Department of Agricultural Economics and Agribusiness, University of Ghana, Accra, Ghana *Corresponding author email: kwamebrako@yahoo.com This study investigates how innovation practices including product, process, marketing and organizational innovation affect agribusiness performance such as innovative, production, marketing and financial performance in Ghanaian agribusiness companies. Data were collected through survey questionnaires from 1526 respondents mainly from inputs supplies, production and marketing agribusiness companies. Data were analyzed by principal component analysis (PCA), and exploratory and confirmatory factor analysis. We also employed the structural equation modelling (SEM) in determing the relationships between the variables. The results reveal the positive effects of innovation practices on agribusiness performance. Managerial implications are also discussed. Keywords: innovation practices, agribusiness sector, performance, Ghana Introduction Research has proven that innovativeness is a basic growth the introduction of a new or slightly improved product strategy tool that can enable entry to new markets, with regard to its characteristics, including improvements increase market share and provide a firm with a competi- in its technical specifications (Atalay, Anafarta, and tive advantage (Saxena 2012). Increasing competition Sarvan 2013). Product innovation can use new technol- among global markets serves as motivation why most ogies and can also be targeted at new uses of existing tech- companies have adopted innovation, since fast-changing nologies or a blend of them. Product innovation is being technologies and intense global competition normally driven by improving technologies, satisfying customers’ diminish the value added by existing products and ser- shortening product life cycles and increasing global com- vices. Innovations create an essential module of corporate petition. Effective interaction within the firm as well as strategies for different reasons, such as the application of between the firm, its customers and its suppliers gives intense productive manufacturing processes, to assess the firm success (Nicolau and Santa-María 2013). market performance, to gain positive reputation in custo- Process innovation has to do with the implementation mers’ mind so as to gain sustainability among competing of a new or slightly improved production or delivery brands (Abou-Zeid and Ben-Akiva 2014). Over the last method. This includes changes in techniques, tools and/ two decades, innovativeness has attracted the attention or software. Process innovation can be used to reduce of researchers who have tried to define, classify and inves- unit costs of production or delivery, improve quality, or tigate its performance influences, mainly due to its useful deliver slightly improved products (Johansson and relevance (Wanvoeke et al. 2015). Innovations give firms Sundin 2014). Piroozfar, Halajzadeh, and Ilkhani (2015) a strategic positioning to overcome the challenges they discussed that while the introduction of new products is encounter while striving to achieve sustainability among usually expected to have a clear, positive influence on competing brands (Al-Sulaiti et al. 2010). the growth of income and employment, process inno- Innovation does not only relate to products and pro- vation can have a foggy influence due to its cost-cutting cesses; marketing and organizational activities also have nature. relations with innovation. In their research, D’Aleo, Marketing innovation is explained as the execution of D’Aleo, and Bonanno (2017) explained different types a new way of marketing, comprising slight changes in of innovation: new approaches of production, new product packaging, promotion or pricing. The task of mar- sources of supply, new ways to organize business and keting innovation comprises finding better solutions to new products. OECD 2005, which is considered the fun- customers’ concerns, enlarging new markets, or placing damental international basis for explaining and assessing a firm's product on the market to help increase sales. Mar- innovation activities for use of related data, has been keting innovation has more to do with pricing strategies, adopted as the basic reference source to describe, identify product design, product placement and promotion activi- and categorize innovations at firm level (Hjalager 2010; ties which are embedded in the four P's of marketing Camisón and Monfort-Mir 2012). (Saunila, Pekkola, and Ukko 2014). Four different types of innovation are introduced in the Lastly, organizational innovation deals with executing Oslo Manual, OECD 2005. These are product innovation, new organizational methods in the firm's business prac- process innovation, marketing innovation and organiz- tices, including its internal and external relations. Organiz- ational innovation. The concept of technological develop- ational innovations enable businesses to increase their ments provides increased connections with product and performance by reducing transaction and administrative process innovation. A product innovation has to do with costs, increasing labour productivity, or reducing cost of African Journal of Science, Technology, Innovation and Development is co-published by NISC Pty (Ltd) and Informa Limited (trading as Taylor & Francis Group) 2 Ntiamoah, Li and Sarpong suppliers (Camisón and Villar-López 2014; Govindan and manufacturing of food, food packaging, wholesale, et al. 2015). retail distribution, and market centres. In recent years, Recent innovation literature seeks to find the relation- the establishment of agribusiness firms has helped to ship between innovation and firm performance. Quite a increase employment and income. The term agribusiness number of conceptual studies have been conducted but in recent studies has been linked mostly to establishments there seems to be a limited number of analytical and with good corporate structures and international appeal. empirical studies with very in-depth analysis. Only a Historically, transnational enterprises within the food few studies have closely examined the relationship system spread across national boundaries filling a void between innovation and firm performance as Spithoven, within the vertical food system from farm provider to Clarysse, and Knockaert (2011) identified. The focus of final client and carrying on those functions of input tech- most empirical studies lies on the relations between the nology, farming, grading, gathering, storage, processing, dimensions of innovation and a single performance and distribution that either don't seem to be performed in aspect. The focus of this research is to examine innovation the least or inefficaciously performed by others within and its impacts on firm performance. A comprehensive the total vertical food system we call agribusiness (Bruni innovation-performance analysis based on a structural and Santucci 2016). equation modelling approach, which also indicates the path relationship between all variables used, is the contri- Firm performance bution of this study. Innovative performance is regarded as one of the effective drivers of other facets of organizational performance. The Conceptual issues on innovation formation of corporate learning with constant efforts for Changes such as technological, social and political have improvements has also helped businesses to innovatively over the last decades taken the global stage. Recent litera- perform well in recent times. Gunday et al. (2011) stressed ture now recognizes different phrases such as globaliza- that technical and administrative innovation which falls tion, global warming, the borderless world, personal under innovation performance leads to organizational computer and the Internet. Changes in organizations are growth and profitability. They also emphasize that the becoming tedious rather than easy, vigorous rather than missing link between organizational strategic orientations stable and hostile in form rather than friendly (Gareis and performance is innovative performance. Gunday et al. 2010). There is also a clear misinterpretation in the (2011) found that technologically innovative products meaning of innovation and invention. An invention is a have a statistically positive impact on operational perform- new version of a device, product, process or system ance. Changes within the business environment can be whiles innovation is the application of new ideas which dealt with when businesses integrate administrative and come from the core ideas and is in essence branded by technical functions into their corporate structure. Inno- change (Parida, Westerberg, and Frishammar 2012). vation activities are carried out to help businesses increase However, businesses in difficult times can adapt some their market share, increase production flexibility and sort of flexibility when they try continuously to reinvent create new markets (Epstein and Buhovac 2014). Innova- their business model. Success in innovation can be tive performance on firms’ production, market and finan- attained via technological facilities, trained workers and cial performances can cause businesses to make a loss or support from management (Barrett et al. 2015). The Inno- break-even in the short run due to the initiated investments vation Union explains innovation as transformation that and internal resource usages and then win or gain in the speeds up and improves the way we conceive, develop, long run. New technology adoption for innovation produce, and access new products, industrial processes comes with its consequence. Enough time is needed for and services (Hjalager 2015). With the different expla- a business to assess the positive effects of innovations nations on innovation given so far, innovation can be on firm performance. Businesses for this reason link inno- seen as a process of equipping and refining products and vative performance to the non-financial aspects of corpor- services to appeal to customers’ taste and demand. Inno- ate performance like increasing customer satisfaction and vation is basically about finding and using opportunities increasing production speed, which will later lead to to create new products and services (Černe, Jaklič, and higher financial returns. When innovative performance Škerlavaj 2013). Worker capability improvement and improves, production and marketing performances also better wages and salaries are a result of businesses’ increase, which later leads to an increase in financial per- decisions to expand their innovation activities. The formance. Innovative performance, particularly the kind impact of innovations on firm performance differs in related to new product success, is connected in the litera- scale from sales, market share and profitability to output ture to a rise in sales and market share, since it contributes and efficiency (Olughor 2015). significantly to the satisfaction of existing customers and the gaining of new customers (Ghisetti and Rennings Agribusiness 2014). In addition to new product success, achievement Agribusiness in Ghana consists of the overall activities of in marketing, process and organizational innovations farms and those businesses that amass, process and together lead to an improvement in customer satisfaction. convert raw agricultural commodities into final products Earlier innovation literature emphasizes that production for distribution within Ghana and other countries (World performance, such as speed, flexibility and quality cost Bank 2012). These economic activities comprise repair efficiency appears to be closely linked to firm perform- of machinery, production of fertilizer, farming, processing ance. Process exertion and higher performance in African Journal of Science, Technology, Innovation and Development 3 innovation encourage corporate learning and increase the investigated the relationship between the degree of inno- speed and quality of operations. Technological inno- vation (measured in innovation in products, processes vations can certainly be adopted by businesses to and administrative systems) and performance among a become faster than their competitors. Businesses that sample of 1091 Spanish manufacturing SMEs. An impor- have invested more in quality practices benefit from sig- tant contribution of the study is the empirical evidence on nificantly higher financial rewards. Equally, there is a posi- the relationship between three types of innovation tive correlation between non-financial manufacturing (product, process and managerial/systems) and four performance and financial performance (Gunday et al. measures of performance (human relations approach, 2011; He et al. 2014). internal process approach, open systems approach and rational goal approach). Findings of the study provide evi- Innovation and firms performance dence that innovation positively impacts SMEs perform- There is a correlation between profitability and the growth ance in low and high technology industries. The study of an organization and its performance. Competitive forces also found that innovation is more important in achieving from the business environment lead most businesses to a competitive advantage in high than low technology adapt to the external environment, thereby integrating firms. These results support the proposition that inno- competence and usefulness. Performance of firms’ inno- vation is crucial to a firm's sustainable competitive advan- vation activities are influenced by the opportunities pro- tage. Li (2017) examined the impact of two types of firm vided by their external environment. This explains why innovation activities (exploratory innovation and exploita- businesses in emerging markets give prominence to inno- tive innovation) on performance. Data of interest were col- vative activities that build their reputation in the market lected from 397 enterprises in eastern, middle and western environment. Most businesses undertake innovative China. Using hierarchical regression analyses, the study activities to improve their business performance and com- found that both exploratory innovation and exploitative petitive advantage (Easterby-Smith, Thorpe, and Jackson innovation have a positive effect on firm performance 2012). According to Augusto, Lisboa, and Yasin (2014), and that the fit between innovation activity and business there is a direct relationship between innovations and strategy of the firm has a significant impact on firm per- firm performance based on an integrated innovation-per- formance. In general, these empirical research studies formance study conducted on 184 manufacturing firms add to the existing body of knowledge which argues that operating in Turkey. firm-level innovation is a predictor of organizational per- Crossan and Apaydin’s (2010) study on the relation- formance (Figure 1). ship between learning orientation, firm innovation and firm performance among US firms shows that learning Material and methods orientation is insignificant for innovation and perform- Research hypothesis ance. A study conducted on 600 firms in the manufactur- Product innovation and firm performance ing sector by the Journal (2010) on innovation practices Product innovation has many dimensions. First, from the and its effects on performance of SMEs in Australia perspective of the customer, the product is new to the cus- revealed that innovation strategy is a key driver of per- tomers. Second, from the perspective of the firm, the formance of SMEs. They concluded that SMEs perform- product is new to the firm. Third, product modification ance will improve when the alignment between means bringing product variation to the existing products innovation culture and strategy is realized within the inno- of the firm. Firms bring product innovation to increase vation process. The examination of 320 SMEs operating in efficiency in the business. New product development the ICT industry in Malaysia was examined by Crossan and product innovation are important strategies for and Apaydin (2010). The outcome revealed that organiz- increasing the market share and performance of the ational learning contributes to innovation capability and, business. Studies showed that new product development in turn, that innovation is positively related to firm. has a positive impact on the performance of the firm (Bat- tilana and Lee 2014; Schad et al. 2016). Based on this lit- Impacts of innovations on firm performance erature, we derive our first hypothesis as: Both empirical and theoretical research confirms the posi- tive relationship between innovation and performance. In H1: Product innovation leads to firms’ performance a study by Kim Man (2009) that focused on the relation- ship between innovation and organizational structure of Process innovation and firm performance Taiwanese SMEs in the manufacturing and services Firms implement novelties in the production and delivery sector, company performance was measured in terms of method to bring efficiency to the business. The new company sales. Empirical data were collected through a method must be new to the organization. The firm can telephone survey from a population consisting of compa- develop new process either by itself or with the help of nies located in the northern part of Taiwan that had less another firm. Firms implement process innovation and than 200 employees. The research found that 80% of the amendments to produce innovative products. To decrease surveyed companies conducted some sort of innovation. production costs, firms implement new process inno- However, administrative innovation was found to be vation. Such process innovation is normally reflected in more important than technological innovation in explain- the cost of the product (Hassan et al. 2013; Karabulut ing company performance. A study by van Auken, 2015). Based on this literature, we derive our second Madrid-Guijarro, and García-Pérez-de-Lema (2008) hypothesis as: 4 Ntiamoah, Li and Sarpong Figure 1: A conceptual framework. H2: Process innovation causes firms’ performance administrative s Firms implement organizational inno- vation to bring efficiency to the business. Organizational Marketing innovation and firm performance innovations bring changes to firms’ organizational setup. The objective of marketing innovation is to increase sales They change the ways of organizing things to compete and market share and to open up new markets. The distinc- with their competitors and satisfy their customers tive feature of marketing innovation that differentiates it (Hassan et al. 2013; Maziriri and Chinomona 2016). from the other types of innovation is the implementation This literature led to our final hypothesis: of new marketing methods that the firm has never implemented before. Firms implement innovation in H4: Organizational innovation stimulates firms’ their marketing methods to bring efficiency to their performance business. Marketing innovation involves developing new marketing techniques and methods. Developing new tech- Data sample niques, methods and tools for marketing can have a sig- In exploring the factors positively affecting or stimulating nificant role in the success of the organizations firms’ performance, a questionnaire was developed, and (Hallstedt, Thompson, and Lindahl 2013; Paillé et al. the survey included 2500 individuals in each of the 10 2014). This led to our third hypothesis: regions in Ghana. Two-hundred-and-fifty copies of the questionnaire were given to agribusiness firms in each of H3: Market innovation induces firms’ performance the regional capitals in Ghana. Due to technicalities with Organizational innovation and firm performance some of the questions asked in the questionnaire, respon- For organizational innovation, firms change their method dents were asked to complete the questionnaire in consul- of organizing and implemented ones not used before. tation with managers and line supervisors of these Organizational innovation can increase the performance agribusiness firms as well as in consultations with one of of an organization by decreasing transaction and the authors present. Also, interviews were conducted for African Journal of Science, Technology, Innovation and Development 5 employees who have little or no educational background. principal component analysis (PCA). PCA was used to Out of the 2500 invitations extended, a total of 1526 minimize sets of variables into a convenient set of copies of questionnaire were retrieved constituting scales. In considering the underlying dimensions of per- 61.04% of the total questionnaires given to respondents. formance and innovation, the PCA with varimax rotation In checking non-respondent bias we employed the t-test was conducted. Still in this stage, we explored the conver- approach and no significant difference was found gent validity (AVE) and reliability via the Cronbach alpha between the interviews conducted and actual copies of test. The second stage of this analysis constituted explor- questionnaire filled in by the respondents. In the analysis, ing the relationships between our factors. We employed variables such as size, age and ownership status were structural equation modelling (SEM) together with deemed control variables. AMOS SPSS software to determine these relationships. Measurement of variables Results Each of the constructs was measured by original measure- Descriptive analysis ment items designed by the authors. Product innovation Table 1 shows data retrieval presentation of the question- was measured on collaboration, ideation, implementation naires extended to managers and employees of agribusi- and value creation. Process innovation was measured on ness firms in Ghana. Brong Ahafo Region recorded the mastering of techniques, equipment and software. highest with 83.6%. Volta region recorded the lowest Market innovation was measured by the improvement of with 41.6%. In all, 1526 questionnaires were retrieved firms’ 4Ps (product, pricing, promotion and place). out of the 2500 questionnaires submitted. Finally, organizational innovation was measured on Table 2 indicates average responses to our latent vari- power structure, management structure and procedural ables. The average mean value is more than 4, indicating processes. We measured our dependent variable firms’ that respondents agreed to questions under each of the performances on innovative performance, market constructs. performance, organizational performance and market per- formance. The questions were asked on a 5-point Likert scale in which 1 indicates strongly disagree, 2 indicates Checking internal consistency and validity disagree, 3 represents neutral, 4 represents agree, and 5 The KMO value of 0.813 indicates a good sampling ade- indicates strongly disagree. The reason for using this quacy in our data. BTS value of 25378.506 reveals accu- Likert scale items was due to the fact that most firms rate sampling adequacy in employing factor analysis were reluctant to disclose actual performance records. (Table 3). The composite Cronbach alpha on each of our five (5) Research tools latent variables indicates a suitable level of internal con- In exploring the relationship in each of our latent variable sistency amongst the scale items because all the values constructs, multivariate data analysis was deemed necess- were above the lower threshold of 0.70. Also, our AVE ary in two stages. With the first stage, we extracted the values above the 0.50 threshold show that our data factor structure of our conceptual framework by using satisfy the principle of convergent validity (Table 4). Table 1: Data retrieval (Regional analysis). Region Regional capital Data submitted Data retrieval Percentage Greater Accra region Accra 250 198 79.2% Central region Cape Coast 250 156 62.4% Western region Takoradi 250 201 80.4% Ashanti region Kumasi 250 184 73.6% Volta region Ho 250 104 41.6% Brong Ahafo region Sunyani 250 209 83.6% Northern region Tamale 250 193 77.2% Eastern region Koforidua 250 182 72.8% Upper East region Bolgatanga 250 147 58.8% Upper West region Wa 250 153 61.2% Source: Authors’ Construct, 2017 Table 2: Summary statistics of Likert scale variables. Variables N Min. Max. Avg. Std. Dev Product innovation 1526 1 5 4.1982 1.0054 Process innovation 1526 3 5 4.7219 1.1768 Market innovation 1526 2 5 4.0853 0.8583 Organizational innovation 1526 3 5 3.9884 0.9134 Firms performance 1526 2 5 3.8694 1.2495 Source: Authors’ Construct, 2017 6 Ntiamoah, Li and Sarpong Table 3: KMO and Bartlett's test of Sphericity. Table 6: Factor loadings. Kaiser-Meyer-Olkin measure of sampling adequacy Factor (KMO) 0.813 1 2 3 4 5 Bartlett's Test of Sphericity Approx. 25378.506 Collaboration .589 (BTS) Chi-square Ideation .913 df 153 Implementation .897 Sig. 0.000 Value creation .683 Source: Authors’ Construct, 2017 Technique .854 Equipment .832 Software .764 Product .764 Pricing .845 Table 4: Reliability and validity test. Promotion .839 Place .735 Cronbach Convergent validity Power structure .779 Variables alpha (AVE) Management system .896 Product innovation 0.856 0.528 Procedural innovation .717 Process innovation 0.923 0.632 Innovation performance .743 Market innovation 0.784 0.598 Organizational performance .549 Organizational 0.778 0.624 Market performance .536 innovation Financial performance .542 Firm's performance 0.942 0.514 Source: Authors’ Construct, 2017 Source: Authors’ Construct, 2017 factor loadings. As a result of this, the values derived from Exploratory factor analysis our modification indices showed evidence that it is With this table, orthogonal extraction with varimax was unnecessary to keep these factors. By so doing, these considered appropriate in the analysis because it was factors were deleted in our final structural equation model- deemed necessary for a large number of variables with a ling to obtained appropriate model fit values (Table 7). minimum set of uncorrelated variables. Specifically, Our unstandardized regression weights indicate that all varimax rotation was employed to minimize variables values in our construct were significant with p-values with high factor loadings to augment the interpretation <0.04. of factors. Five (5) factors in the principal component Our model showed that our standardized residual analysis had eigenvalue >1.0, explaining a total variance covariance has a standard normal distribution with most of 78.958% (Table 5). of the values <2 in absolute value (Table 8). This table depicts that all factors are significant, Table 9 depict goodness-of-fit indices performed using ranging from .536 to .913 with p-values <0.05 (Table 6). the maximum likelihood estimation. These goodness-of-fit Figure 2 represents the confirmatory factor analysis indices were conducted using the variance-covariance (CFA) derived from our AMOS software. The factor matrix obtained by ensuring correspondence with the loading from each of our constructs depicted high and sample. The λ2/degree of freedom value of 3.714 corre- low loadings. Financial performance, market performance, sponds with the general rule of 1< λ2/df< with the value organizational performance and collaboration showed low indicating a better fit. The CFI (comparative fit index), Table 5: Total variance explained. Initial eigenvalues Extraction sums of squared loadings Rotation sums of squared loadings Component Total % of Variance Cumulative % Total % of variance Cumulative % Total % of Variance Cumulative % 1 8.849 49.160 49.160 8.849 49.160 49.160 3.825 21.248 21.248 2 2.128 11.822 60.982 2.128 11.822 60.982 3.533 19.630 40.878 3 1.344 7.468 68.450 1.344 7.468 68.450 2.475 13.751 54.630 4 1.062 5.900 74.350 1.062 5.900 74.350 2.463 13.682 68.312 5 .830 4.609 78.958 .830 4.609 78.958 1.916 10.646 78.958 6 .653 3.630 82.589 7 .569 3.161 85.750 8 .557 3.094 88.844 9 .470 2.613 91.457 10 .324 1.802 93.259 11 .273 1.516 94.775 12 .259 1.441 96.216 13 .210 1.167 97.383 14 .146 .809 98.191 15 .120 .668 98.860 16 .089 .494 99.354 17 .062 .343 99.697 18 .055 .303 100.000 Source: Authors’ Construct, 2017 African Journal of Science, Technology, Innovation and Development 7 Figure 2: Confirmatory factor analysis (CFA). NFI (normed fit index), RFI (relative fit index), IFI (incre- innovation has a positive impact on firms’ performance. mental fit index) and TLI (tucker-Lewis fit index) all According to the regression estimates, process innovation reported a very good fit because the values were all is seen as the most influential driver of firms’ performance. close to 1. Finally, the RMSEA value of 0.0034<0.08 Also, it was observed that product innovation has an indir- also depicts a good model fit. ect positive impact on firms’ performance. Finally, it was This structured model measures the effects of inno- observed that the r-squared value of 0.575 shows that vation (product, process, market and organizational) on 57.5% of preceptor variance is explained by the predictor firms’ performance. This theoretical scheme (research variables. model) is presented in Figure 3. Table 10 shows the stan- dardized and unstandardized path estimates as well as the Discussions p-values for our structural model. Each of our hypotheses Stimulating the growth of agribusiness firms goes beyond with p-values<0.05 was supported. This further supports laying appropriate marketing strategies and rather hinges the fact that product, process, market and organizational on innovation practices. The ability to adopt and 8 Ntiamoah, Li and Sarpong Table 7: Regression weights (Group number 1-Default model) Estimate S.E. C.R. P Col ← product 0.474 0.019 24.736 *** Ide ← product 0.895 0.017 51.737 *** imp ← product 1 vc ← product 0.623 0.019 33.016 *** tcq ← process 1 equ ← process 0.994 0.024 40.842 *** sof ← process 0.866 0.024 35.666 *** pro ← market 0.814 0.026 30.851 *** pri ← market 0.951 0.024 40.153 *** prom ← market 1 pla ← market 0.937 0.028 32.992 *** ps ← org 0.831 0.023 35.576 *** ms ← org 1 pi ← org 0.818 0.026 31.588 *** ip ← fin 1 op ← fin 0.741 0.036 20.42 *** mp ← fin 0.706 0.035 20.011 *** fp ← fin 0.708 0.036 19.944 *** Source: Authors’ Construct, 2017 Table 8: Standardized correlation results Ip Pi Ms Ps Pla Prom Pri Pro Sof Equ Tcq Vc Imp Ide Ip 0 Pi 0.152 0 Ms 0.083 −0.063 0 Ps 0.178 −0.209 0.112 0 Pla −0.264 0.546 0.015 0.002 0 prom 0.124 0.344 0.03 0.084 0.148 0 Pri −0.041 −0.139 −0.134 −0.019 −0.061 −0.106 0 Pro 0.036 −0.151 −0.091 −0.019 −0.13 −0.047 0.233 0 Sof −0.165 −0.051 −0.002 0.019 −0.02 −0.009 0.16 0.148 0 Equ 0.066 −0.099 0.017 −0.008 0.013 −0.057 −0.025 −0.036 −0.003 0 Tcq 0.215 −0.079 0.049 −0.009 0.043 −0.062 −0.017 −0.003 −0.045 0.034 0 Vc 0.269 0.027 −0.071 −0.069 −0.21 0.04 0.023 0.061 0.084 0.059 0.069 0 Imp −0.011 0.087 −0.058 −0.188 0.13 −0.028 −0.084 −0.172 0.028 0.073 0.141 0.066 0 Ide −0.036 0.028 0.032 −0.012 −0.065 −0.089 0.141 0.042 −0.003 −0.084 −0.092 −0.04 0.051 0 Source: Authors’ Construct, 2017 implement workable innovation practices by an agribusi- fit index), TLI (tucker-Lewis fit index) and RMSEA (root ness firm gives it more competitive advantage than its mean square error) all showed the existence of good or competitors. Agribusiness firms in advanced countries better fit when compared to the reference value in Table 9. are growing at a speedier pace than agribusiness firms in In confirming the relationship between innovation developing and emerging countries (Horbach, Rammer, practices to firms’ performance (production innovation and Rennings 2012). Based on this background, we ana- to firms’ performance, process innovation to firms’ per- lyzed the effects of innovation practices on agribusiness formance, market innovation to firms’ performance and firms’ performance. organizational innovation to firms’ performance) we Tackling the structural equation model used for our resorted to regression in AMOS to depict these relation- confirmatory analysis, it was evident from our standardized ships. Regression weights were found for all the variables correlation matrix that those variables with low factor load- under each of the constructs and recoded into one variable ings were not included. This hinges on the fact that those for all five (5) observed variables (product innovation, variables (collaboration, organization performance, market performance and financial performance) have Table 9: Goodness-of-fit indices factor loadings below 0.70. Our standardized correlation weight table showed evidence of standard normal distri- Goodness of Fit Construct Reference Value bution because all the values satisfied the threshold of λ2/degree of freedom 3.714 1< λ2/df<5 being less than two (2) in absolute value. After satisfying CFI (comparative fit index) 0.962 0.95