Does the psychometric validation of the sustainable competitive advantage questionnaire support its correlation with innovation capabilities?

Abstract This study aimed to investigate the impact of innovation capabilities, specifically product and process innovation, on sustainable competitive advantage in small businesses in Erbil, Iraq. The research employed a quantitative approach, utilizing a Likert scale questionnaire with 194 participants selected through stratified sampling comprising small business owners and top managers in Erbil province. Validity and reliability were rigorously examined through exploratory (EFA) and confirmatory factor analyses (CFA). The psychometric assessment of the study variables revealed promising outcomes. These results signify the robustness of the questionnaire items in capturing the intended constructs. Descriptive statistics, regression analyses, and factor analyses are used. The (CFA) demonstrated a Comparative Fit Index of 0.98, a Goodness-of-Fit Index (GFI) of 0.86, and a Root-Mean-Square Error of Approximation of 0.018, indicating an excellent fit. The (EFA) yielded a Kaiser–Meyer–Olkin index of 0.86, with a significant Bartlett's test of sphericity ( p < 0.001). Communalities ranged between 0.33 and 0.61, suggesting a satisfactory level of shared variance among the items. Results indicated that age, academic qualification, and working duration did not exhibit significant univariate relationships with sustainable competitive advantage. However, gender and position within the organizations emerged as significant determinants. Both product and process innovation demonstrated strong positive univariate relationships with sustainable competitive advantage. In the multivariate context, gender lost statistical significance, while the position remained a significant predictor, and both innovation capabilities retained highly significant positive relationships with sustainable competitive advantage. The study highlights the importance of fostering innovation capabilities, particularly product and process innovation, for enhancing sustainable competitive advantages in small businesses in Erbil, Iraq.