EFFECT OF INNOVATION ON PERFORMANCE OF MANUFACTURING FIRMSIN NORTH EAST NIGERIA.

Abstract

The study examines the relationship between innovation and the performance of manufacturing firms in North East Nigeria. It highlights the critical role of innovation in addressing the declining contribution of the manufacturing sector to Nigeria's GDP, as reported by the National Bureau of Statistics (2023). The study focuses on how various dimensions of innovation—product, process, marketing, and organizational impact the performance of manufacturing firms, which is assessed through equity, assets, sales, returns, and employee count. Survey design was adopted and data was collected using structured questionnaires distributed to management staff of 20 registered manufacturing firms. Out of 422 distributed questionnaires, 375 were valid and analyzed and used as our sample size. On analysis method Partial Least Square Structural Equation Modeling (PLS-SEM) via Smart PLS software was employed to test hypotheses. The study found a positive and statistically significant effects on Product, marketing, and organizational innovations to significantly improved firm performance. Meanwhile, Process innovation did not show a positive contribution to performance, which possibly indicating misalignment with operational or market needs. The study conclude that Innovation adoption is critical for enhancing firm performance and competitiveness and thereby recommends Align innovations with operational needs and market trends, by Conduct cost-benefit analyses to ensure investments are sustainable and use comprehensive market research to understand target audiences and optimize marketing strategies.