Abstract:
The global and dynamic landscape of the business environment necessitates
firms to effectively assimilate, transform, and exploit their newly acquired knowledge
to ensure the ultimate innovative result. However, innovation is a creative-destruction,
as it could yield both positive and negative rippling effects. It is thereby imperative
for firms to ensure that the implementation of their innovative activities, facilitated by
effective firm-level absorption capacity, transcends beyond the economic dimension
of sustainability to incorporate ecological and social dimensions. The study
investigated the influence of the dimensions of absorption capacity on sustainable
innovation of firms. The study was limited to 549 firms with data sourced from the
Ghana Enterprise Survey combined with the Ghana Innovation Follow-up Survey,
conducted in 2013 and 2014 respectively. The study applied both the ordered-logit
and the logistic regression models. The study found that the knowledge acquisition
capacity of firms exerts a significantly positive effect on firms’ likelihood to
sustainably innovate. The capacity of firms to transform knowledge exerts
significantly positive effect on firms' likelihood to sustainably innovate. Furthermore,
knowledge exploitation capacity of firms was found to exert a positive and significant
effect on firms’ likelihood to introduce at least a form of sustainable innovation. The
study recommended that the government of Ghana, through the Ministry of Trade and
Industry, in collaboration with the Ministry of Finance, should support research and
development of firms through granting of interest-free loans for research and
development purposes. The study, further, recommended that firms should prioritize
investment in state-of-the-art machinery, ultra-modern equipment, and cutting-edge
software to facilitate seamless knowledge transformation within the organization.
