MEDIATING ROLE OF ADHOCRACY CULTURE ON THE IMPACT OFMARKETING INNOVATION CAPABILITY AND STRATEGIC AGILITY ONSMALL AND MEDIUM ENTERPRISES (SMEs) PERFORMANCE IN KOGI STATE

Abstract

SMEs play a vital role in economic growth and industrialization but continue to face
performance challenges in turbulent environments. This study examines the mediating role of
Adhocracy Culture (AC) on the impact of Marketing Innovation Capability (MIC) and
Strategic Agility (SA) on SME performance in Kogi State, Nigeria. Anchored on Dynamic
Capability Theory (DCT), data were collected through a cross-sectional survey of 352 SMEs
and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). The
measurement model showed strong reliability and validity across constructs. Thel results
indicate that MIC and SA exert significant direct effects on SME performance, while both
constructs also significantly influence AC respectively. AC demonstrates a strong positive
effect on performance. Mediation analysis confirms that AC significantly mediates the effects
of MIC and SA on performance. The model explains 60.4% of the variance in SME
performance and 60.1% of the variance in AC, reflecting substantial predictive power. Effect
size results show that SA has a large effect on AC (f² = 0.620), while AC has a moderate
effect on performance (f² = 0.179). The findings reveal that AC strongly mediates the
relationships between MIC, SA and SME performance by fostering adaptability, creativity,
and risk-taking within SMEs. Theoretically, the study extends DCT by integrating AC as a
mediating mechanism, while practically, it recommends that SME managers cultivate an
adhocracy-oriented culture that encourages decentralization, innovation, and flexibility.
Policymakers should complement financial and infrastructural support with culture-building
programs such as leadership development, innovation training, and mentorship. SMEs are
further encouraged to leverage digital tools, collaborative partnerships, and data-driven
strategies to reinforce agility and sustain innovation-led competitiveness in turbulent
markets.