Examining the influence of absorptive capacity on the sustainable growth of agro-processing enterprises through innovation capability

Abstract

Entrepreneurial Absorptive capacity (ability to spot useful new information, learn it quickly, understand it, and turn it into actions that improve business) and innovation capability (a business’s ability to come up with new ideas and successfully turn them into better products and services) are major critical factors in a modern, competitive global business environment that help enterprises solve sustainability issues. The purpose of this study is to examine the mediating role of innovation capability on the relationship between entrepreneurial absorptive capacity and sustainable growth of agro-based processing enterprises in Ghana. From a positivist perspective, this study employed a quantitative approach and an explanatory research design to establish cause-and-effect relationships between the independent and dependent variables and to test the theory and hypothesis. 212 registered agro-businesses in Ghana’s central region were sampled for this study. Data were collected using structured questionnaires and analyzed using Structural Equation Modelling (SMART PLS 4). The findings show that agro-based enterprises grow better and last longer when entrepreneurs are good learners. The study further explains that learning brings ideas, innovation turns those ideas into action, and action leads to steady profits, better livelihoods, and businesses that grow without harming people or the environment. This also means that entrepreneurial absorptive capacity and innovation capability have positive effects on sustainable growth, and that innovation capability again mediates the relationship between absorptive capacity and sustainable growth in agro-processing businesses. The originality of this study lies in its examination of the mediating role of innovation capability in the relationship between Entrepreneurial absorptive capacity and the sustainable growth of Ghanaian agro-based enterprises. This phenomenon has been underexamined, creating a gap for this study’s coverage.