Linking innovation capability to market performance of tanzanian leather manufacturing small and medium enterprises: the mediating role of marketing capability

In resource-constrained environments, firms often struggle to translate innovation capability into market outcomes. Drawing on the Resource-Based View and Dynamic Capabilities Theory, this study examines the effect of innovation capability on firm performance and the mediating role of marketing capability among leather manufacturing Small and Medium Enterprises (SMEs) in Tanzania. Adopting a quantitative, cross-sectional research design, survey data were collected from 145 firms and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that innovation capability has a positive but limited direct effect on performance. Moreover, marketing capability partially mediates this relationship, with the indirect effect exceeding the direct effect, suggesting that a substantial portion of the effect of innovation capability on firm performance is transmitted through marketing capability. The study provides firm-level evidence from an underexplored African leather manufacturing context, extending capability-based perspectives to resource-constrained settings. Practically, the findings emphasize that innovation investments generate stronger market outcomes through marketing capability, underscoring the need for integrated support mechanisms that jointly strengthen both capabilities to enhance SME competitiveness.