Financial mechanisms in promoting indigenous innovations in developing countries: below-the-radar-theory perspective

Government incentives are critical to the successful commercialisation of innovations, yet, there are concerns about their efficacy. This study explores the impact of government incentives on the successful commercialisation of indigenous innovations in low-income economies. The theoretical framework built on the below-the-radar theory of innovation has used a sample of 557 firms engaged in the commercialisation of indigenous innovation in the Ghanaian Small-Scale Industry. A partial least squares structural equation modelling (PLS-SEM) was executed to assess 11 hypothesised paths based on a validated questionnaire. The model results indicate that supply-side incentives are insignificant on sales and profitability but have a positive impact on employment growth. The direct and moderating effect of market factors on overall firm performance is also insignificant. However, the demand-side incentives to buyers have a significant positive impact on all the performance metrics and also positively moderate market factors. The main limitation of the study is that the data used in the study were self-reported, where respondents gave their assessments of their innovation performance. However, it is believed SME owners would reflect better on their realities when doing subjective assessments. The current analysis seems to favour demand-side incentives, yet, the study is more of a supply-side view as it measures the effects of government incentives on successful commercialisation from the perspective of firms. This study is original with its focus on the commercialisation of indigenous innovations in the context of low income economies. Commercialising indigenous innovations could be the antidote to the development challenges facing developing economies. Few studies, if any, have explored the impact of government incentives on indigenous innovation in the context of low-income economies. Therefore, this study is novel in its execution and application to practice and theory.