Abstract

This study examines the relationships between quality, innovation, competitiveness, and financial performance of firms. Data were obtained from a questionnaire survey involving 223 Saudi companies and were analyzed using Structural Equation Modeling (SEM). The results indicate that innovation positively influences quality and the latter has a significant positive influence on the competitiveness of the firms. As expected, both quality and innovation indicators have an indirect influence on the financial performance of the firms through competitiveness. Therefore, this study discovers the important mediating role played by competitiveness in the positive effects of quality and innovation on financial performance of the firms. Finally, we found significant positive effects of competitiveness on financial performance of the firms. Managerial implications are also discussed.

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