Assessing the Impact of Innovation, Risk-Taking, and Managerial Skills on Business Performance Through Strategic Mediation

Abstract

This study investigates the impact of innovation, risk-taking, and managerial skills on business performance, with a focus on the mediating role of business strategy. Utilizing a comprehensive path analysis approach, the research examines how external environmental factors influence these relationships. Data were collected from 100 firms, and the model was tested using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings reveal that innovation and managerial skills significantly enhance business strategy, which in turn positively impacts business performance. Risk-taking, while crucial, has a more complex relationship, showing direct and indirect effects on performance through strategic mediation. The external environment was found to moderate the strength of these relationships, highlighting its critical role in shaping strategic decisions and business outcomes. This study underscores the importance of fostering innovation and developing managerial competencies as pivotal drivers of effective business strategies. Additionally, it emphasizes the need for businesses to adapt to external environmental factors to optimize performance. The insights gained provide valuable implications for managers and policymakers aiming to enhance business success through strategic planning and resource allocation. Future research should explore these dynamics in different industry contexts and over extended time periods to validate and extend these findings.