Innovation as a Mediating of Relationship Between Internal and External Environment in Agribusiness Performance

Abstract

Agriculture plays an important role in our daily lives and that is why the agroindustry is seen as an engine in determining the social, political and economic development of the country. Therefore, this paper seeks to examine innovation as a mediating of the relationship between internal and external environment on agribusiness performance that is operating in Osun State Nigeria. The main purpose of the paper is to find out if innovation mediates between the internal and external environment. The specific objective of this study is to find out if competitive intensity and technology have an effect on agribusiness performance. The study makes a significant contribution by adding a mediating variable to the two-independent variable. The study used competitive intensity as a variable of internal environment and technology as a variable for the external environment. The study looks at four sub-activities of agribusiness in Osun State which are crop production, livestock, forestry and fishing. The study uses knowledgebased theory as a suitable theory that links the independent variable to the dependent variable. The study looks at the direct relationship of the independent variable to the dependent variable as well as the indirect relationship this time adding the mediating variable. The study retrieves data from owners/managers of the business. The study makes used of questionnaires using stratified sampling. 80 questionnaires were distributed to owners/managers of agribusiness in Osun State out of which, 72 questionnaires were retrieved from owners/managers of the agribusiness. Data were analysed using structural equation modelling processed on smartpl3. The findings show that the intensity of the competition has a negative and insignificant effect on the productivity of the agribusiness, while technology has a positive and significant impact on the productivity of the agribusiness. The research also establishes that innovation is an intermediary between technology and agribusiness performance, while innovation does not mediate between the competitive intensity and the performance of agribusiness. The study concludes that innovation only mediates the interconnection between the external environment and the performance of agribusiness. Therefore, the research recommended that managers/owners of the agribusiness pay less attention to the internal environment, since this has no influence on productivity, while a lot of attention has to be paid to the external environment.