Impact of Absorptive Capacity on Innovation: The Mediating Role of Organisational Learning

The Nigerian pharmaceutical industry, like many other sectors in the country, has been grappling with the challenge of optimal performance. Despite the industry's significant role in the nation's healthcare delivery system, it faces several challenges in achieving optimal performance. Hence, this study investigates organizational learning as a mediator of the impact of absorptive capacity on innovation. Specific objectives are to investigate the impact of research and development intensity on product innovation, assess the influence of employee training and development on organizational innovation and investigate the impact of knowledge management practices on process innovation. A descriptive research design with a population of 431 staff of the Tuyil pharmaceutical factory was used. A sample size of 207 was obtained using the Taro Yamane formula. Hypotheses were tested using Structural Equation Modelling (SEM) with the aid of SmartPLS 3. The findings show that the relationship between research and development intensity, employee training and development and organizational learning mediates the relationship between knowledge management practices and product innovation, organizational innovation, process innovation and innovation are statistically significant, respectively, with R2s of 66.0%, 67.1%, 52.7% and 58.4% as mediator impact and 65.9% as overall impact. The study concluded that organizational learning mediates the effect of absorptive capacity on innovation in a positively significant manner at the Tuyil Pharmaceutical factory.