EFFECT OF NETWORK CAPABILITY ON SMALL AND MEDIUM ENTERPRISES INNOVATIVE PERFORMANCE IN FEDERAL CAPITAL TERRITORY, ABUJA

Abstract

Small and medium-sized enterprises (SMEs) in the Federal Capital Territory (FCT), Abuja, face persistent challenges in achieving innovative performance, partly due to weaknesses in their ability to communicate, coordinate activities, and maintain productive relationships within their business networks. This study therefore examined the effect of network capability on the innovative performance of SMEs in the FCT, Abuja, Nigeria. Specifically, it assessed the effects of internal communication, coordination, and relationship skills on SMEs’ innovative performance. A crosssectional survey research design was adopted, and primary data were collected from SME owners and managers using a structured questionnaire measured on a five-point Likert scale. From a population of 22,861 registered SMEs, a sample of 433 respondents was selected using the Taro Yamane sampling technique with a 10% adjustment for non-response. The collected data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to evaluate the measurement and structural models. The findings revealed that internal communication, coordination, and relationship skills all had positive and statistically significant effects on innovative performance. Internal communication recorded the strongest effect, followed by relationship skills and coordination. The model also demonstrated substantial explanatory power, confirming the importance of network capability in improving SMEs’ innovative outcomes. The study recommends that SME owners and managers strengthen digital communication systems, establish structured coordination mechanisms, and develop strategic relationship-building practices to enhance innovation. The study contributes to the literature by providing empirical evidence on how network capability dimensions influence innovative performance within the context of SMEs in a developing economy, with particular reference to the FCT, Abuja, Nigeria.