The Mediating Role of Knowledge Creation on the Market Sensing- Innovation Nexus

Abstract

This study examined the influential role of knowledge creation in facilitating the effect of market-sensing on innovation. It specifically examines this phenomenon among small and medium scale enterprises (SMEs) in Nigeria. The study hypothesized that market sensing will exogenously have a significant and positive effect on knowledge creation, which will in turn have a positive effect on innovation. Data was collected from strategic managers from the top management teams of 310 small and medium scale enterprises randomly selected from the country’s six geopolitical zones. Using covariance based structural equation modeling (SEM) carried out via version 23 of IBM’s AMOS software. Findings confirmed all four hypotheses specifically demonstrating that market sensing positively impacted knowledge creation and innovation, while knowledge creation was both found to have a positive effect on innovation and to also significantly mediate the effect of market-sensing on innovation. The study then discusses the implication of the findings for both literature and practice, while recommending areas for future research.