The relationship between Innovation and Global Competitiveness: The mediating role of Management Practices evaluated by Structural Equation Modeling

Purpose – This study seeks to investigate whether a good management environment in companies determines results in terms of country competitiveness. Additionally, it aims to verify if innovation plays a role in contributing to this.

Design/methodology/approach – The study used structural equation modeling and data on 138 countries contemplated in The Global Competitiveness Report 2016/2017 (2016 World Economic Forum). A number of theories have been used to relate competitiveness to innovation and to management practices. This discussion was expanded, taking these variables into account in a more comprehensive framework.

Findings – The analysis performed indicates the role of best management practices as a mediator in the relationship that exists between innovation and global competitiveness, which reinforces the importance of a good level of management.

Originality/Value- There have been many studies and discussions about global competitiveness. The factors in the literature used to explain a country ́s degree of competitiveness include cheap labor, abundant raw materials, the amount of capital available for investment, and, especially, the capacity to innovate. Some authors point to a fifth factor: best management practices. The paper shows how this factor improves competitiveness. The most important contribution of this study is to demonstrate that innovation alone cannot by itself ensure competitiveness in companies or nations, and requires the simultaneous presence of best management practices.

Keywords- Global competitiveness; Innovation; Best management practices; Structural equation modeling.

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