The role of absorptive capacity in strengthening entrepreneurial innovation and agribusiness competitiveness among food processing SMEs in Ghana

Abstract

This study examines the role of absorptive capacity in the relationship between entrepreneurial innovation and agribusiness competitiveness in Ghana. Grounded in dynamic capability and resource-based view theories, data were collected from three top management members of 170 agro-business firms and analyzed using Smart PLS-SEM (v4) for path modeling. Findings indicate that an entrepreneur’s ability to learn and adapt significantly influences their capacity to innovate and develop competencies that enhance competitiveness in the agribusiness sector. Specifically, absorptive capacity enables entrepreneurs to generate market-leading innovations, strengthening firm performance relative to competitors. The study contributes to theory by highlighting entrepreneurial absorptive capacity as a critical mechanism linking innovation to competitive advantage and by integrating dynamic capability and resource-based perspectives in the context of Ghanaian agribusiness. Practically, the results suggest that agribusiness managers and policymakers should invest in research and development, foster collaborations with academic institutions and industry experts, and provide employees with the skills, resources, and technologies necessary to acquire, assimilate, and apply external knowledge. These strategies can enhance innovative capabilities, improve operational performance, and support sustainable competitive advantage in a dynamic market environment.