Effect of Entrepreneurship on Sustainable Economic Transformation: The Mediating Role of Innovation Capacity in Nigeria

Abstract

This study investigates the effect of entrepreneurship on sustainable economic transformation in Makurdi, with innovation capacity serving as a mediating variable. The research examines how entrepreneurial activities contribute to structural economic change and how innovation strengthens this relationship. The study anchored in Schumpeter’s theory of innovation and the Resource-Based View (RBV), A cross-sectional survey design was employed, targeting 200 entrepreneurs, SME operators, and policymakers, with data collected via structured questionnaires and secondary sources. Descriptive statistics and regression analysis were used to examine the relationships among the variables. Findings indicate that entrepreneurship positively and significantly influences sustainable economic transformation, while innovation capacity partially mediates this relationship, enhancing productivity, competitiveness, and the scalability of ventures. The study underscores that entrepreneurship alone is insufficient for structural transformation without supporting innovation ecosystems. Policy implications include fostering innovation-driven entrepreneurship through skills development, access to finance, infrastructure support, and integrated entrepreneurship policies. The study recommends that innovation capacity can be enhanced by providing training, technology adoption programs, and research-industry linkages to improve entrepreneurial effectiveness.