Unlocking Innovation from Within: The Role of Internal Knowledge in Enhancing Firm Performance in Sub-Saharan Africa

3. Point-by-point response to Comments and Suggestions for Authors

Comments 1: The English language needs more work. There are many grammatical and typo mistakes in this manuscript. The paper needs to be edited by a native English speaker.

Response 1: The English language has been revised in the revised version with all grammatical and typo mistakes worked on.

Comments 2: Please spell out acronyms on the first mention. Even if you have defined an acronym in the abstract, it has to be defined again in the paper when first mentioned.

Response 2: True and thank you for pointing this out. Acronyms have been spelt out at first mention in the revised article

Comment 3: The authors have put forward many references without any logic. Please remove it.

Response 3: We have worked on the references and ensured that those referenced to, are in the references. The other references are mentioned to emphasize literature, in the literature review and the introduction.

Comment 4: The contribution of this study should be strengthened

Response 4: Research contribution has been strengthened on page 3 of the revised manuscript

Comment 5: A literature gap is missing at the end of the literature review section.

Response 5: Thank you for this observation, upon review of literature, we have added paragraph (last paragraph) on the literature gap on page 5 of the revised manuscript

Comment 6: Also, the theoretical framework section is missing.

Response 6: Thank you. The article focus on the existing literature to inform its contribution to the research arena. We have not included a theoretical framework, which we believe is embedded in the extensive literature we have reviewed. This would be a consideration for the other on-going articles on nearly the same topic.

Comment 7: What is the reason behind taking the square of Age? I cannot see any impact of Age Square because of 0.000 coefficients in all models.

Response 7: Including Age² (the square of firm age) in your model serves to test for a nonlinear (quadratic) relationship between firm age and outcomes like innovation or performance. We include age square because the relationship between a firm’s age and its innovation or performance is often not linear.

Comment 8: The research method is old. Please use the instrumental variable approach to tackle the issue of endogeneity.

Response 8: Than you for raising the endogeneity issue. In this study we use country, regional, and time fixed effects, which help control for unobserved heterogeneity that is constant over time within units. This absorbs many country-specific and firm-invariant omitted variables (e.g., policies, institutions). In addition, we didn’t want to use weak instruments that lead to worse bias than OLS.

Comment 9: The values of R squares are very low in all models.

Response 9: Thank you for the observation. The concern applies mainly to innovation model results, and not performance models results. The innovation is a stochastic outcome influenced by other factors such as market dynamics, internal culture, leadership etc. which are hard to measure especially while using firm level data. We find a low R² likely.

Comment 10: The policy implications should be strengthened. More policy formulation would be more appropriate.

Response 10: Thank you for raising out this key part on policy implications. In the conclusion, the last two paragraphs indicate the policy implication we have strengthened in the revised manuscript.

Comment 11: It would be appropriate to indicate more cohesive future research directions at the end of the conclusion section just before references.

Response 11: Future research direction has been added after the conclusion on page 15.

Comment 12: The references “Carayannis, E. G., & Campbell, D. F. J. (2009). “Mode 3” and “Quadruple Helix”: Toward a 21st century fractal innovation ecosystem. International Journal of Technology Management, 46(3–4), 201–234.” And “Chesbrough, H. W. (2003). Open innovation: The new imperative for creating and profiting from technology. Boston, MA: Harvard Business School Press.” Are presented 2 times in the reference list.

Response 12: Thank you for sighting this repetition. The references have been revised and repetitions removed.

3. Point-by-point response to

Comments 1: Strengthen theoretical framework to facilitate robust hypotheses developments.

The paper lacks a well-developed theoretical framework that would connect internal knowledge, innovation, and firm performance (pp. 2-5). While the literature review cites numerous studies, it fails to develop a coherent theoretical model that would guide the empirical analysis. On page 3, paragraph 2 (lines 8-14), the authors state their contribution but do not anchor it in established theoretical paradigms. I recommend developing a more structured theoretical foundation, perhaps drawing from resource-based view or knowledge-based theory of the firm, with explicit hypotheses linking the constructs under investigation.

Response 1: Thank you for raising this concern.  Theoretical framework on page 4 paragraph 1 and 2 has been added to the revised manuscript.  A contribution on page 3 has been improved as reflected on paragraph 3 and 4.

Comments 2: Explanations for country fixed effects. Tables 1-3 (pp. 8, 10, 11) include country fixed effects, but the authors do not examine or discuss cross-country differences in the key relationships. I would recommend, at least, describing the country characteristics as examples. For instance, sub-Saharan countries examined in this research have substantial institutional variations - Zimbabwe experienced severe economic instability and hyperinflation during the study period, Kenya has a more developed financial market infrastructure, Nigeria's economy is heavily dependent on oil exports, while Tanzania has focused on agricultural development. These institutional and economic differences likely moderate the relationship between internal knowledge and innovation outcomes.

Response 2: Agree. We have added an analysis on cross-country differences on page 13 last paragraph.

Comment 3: Please provide a comprehensive tabulation of variable definitions and measurement procedures to enhance construct clarity and reproducibility. The operational definition of firm performance requires explicit specification (i.e., whether it represents revenue per employee, operating profitability, or another accounting-based performance metric).

Response 3: Thank you raising this. All variables have been defined as per the World bank enterprise survey, and where proxies have been used, they have been indicated under the 3.1 section-data, page 6 paragraph 2 and 7 paragraphs, 1 and 2.

Comment 4: The literature review (pp. 2-5) would benefit from clearer organization around theoretical constructs rather than chronological citation. Following journals' conventions, I suggest structuring the review to establish clear theoretical linkages between knowledge management, innovation types, and performance metrics.

Response 4: Thank you. A theoretical framework has been added and linked to the literature on page 4.

Comment 5: The manuscript would benefit from a more conventional presentation sequence, wherein a complete table of descriptive statistics and correlation coefficients precedes the regression analyses. This standard approach facilitates readers' assessment of distributional properties and potential multicollinearity issues prior to interpreting regression coefficients.

Response 5: The table on descriptives was generated but we preferred having in in the annex rather than in the main text.

Comment 6: Add data limitations acknowledgment. On page 5 (Section 3.1), the authors acknowledge using unbalanced panel data but fail to discuss potential attrition bias or selection issues. World Bank Enterprise Survey data limitations, particularly measurement error concerns and missing data patterns, should be explicitly addressed.

Response 6: The authors acknowledge the missing paragraph on the data limitations given that we have used secondary data. Paragraph 1 on page 7 indicates briefly the existing data limitations used in this research study.

Comment 7: The policy implications warrant substantial expansion. Your findings regarding knowledge-based innovation have significant implications for economic development strategies in emerging economies. However, the conclusion (pp. 13-14, particularly paragraph 1, lines 1-9) lacks specificity in its policy recommendations. I encourage you to develop more targeted prescriptions concerning educational investment priorities, knowledge transfer mechanisms, and innovation policy frameworks that might enhance the observed relationships between internal knowledge and firm-level outcomes.

Response 7: The conclusion section on page 15 has been improved, with detailed policy implications. Second paragraph page 15 show the policy recommendation suggested by the authors, which are based on the study findings.  

4. Response to Comments on the Quality of English Language-Several writing issues diminish the manuscript's clarity: repetitive sentence structures (p. 2, paragraph 1, lines 1-2), overly complex sentences (p. 4, paragraph 1, lines 5-6), and inconsistent reference formatting (pp. 15-19).

Point 1:

Response 1:  The whole manuscript has been reviewed for thorough English check. The mentioned-on paragraphs on page 4- paragraph 1 lines 5-6 now paragraph 3 in the revised manuscript have been corrected to provide fluency.

3. Point-by-point response to Comments and Suggestions for Authors

Comments 1: There are many typographical errors, e.g. in the abstract: This paper Investigates – investigates must be written with a lowercase letter and the language is professionally cumbersome.

Response 1: The abstract is revised and errors removed and language revisited, made simple for the readers.

Comments 2: Standardize the terminology, e.g. firm, organization, enterprise, because if the terminology is not standardized, it can confuse the reader.

Response 2: This is true and agreed on. The terminology firm has been used in the article throughout

Comment 3: There are many errors due to superficiality, such as "Tellis et al.,2012", "Acemoglu et al. 2016" or "Agarwal and Audretsch, 2001" and "Laursen & Salter, 2006".

Response 3: Thank you for identifying these mistakes. The referencing has been harmonized in the whole article.

Comment 4: There is too much literature review in the Introduction chapter. I miss the Research question in this same chapter.

Response 4: The research question is highlighted on page 3, paragraph 3. The literature in the introduction emphasizes the motivation for this research study and portrays the role of knowledge on innovation

Comment 5: The Literature Review chapter is written solidly, although the literature used is mostly older and therefore there is a risk that you have omitted something important. The literature review should result in hypotheses that you did not write down in the article.

Response 5: The whole literature review has been revised and new related literature captured. It precedes the theoretical framework that has been included in the revised manuscript on page 4 paragraphs 1-2.

Comment 6: I have never heard of anything like what you put in the title – Empirical Strategy!? I research and teach strategic management, and I do not know such a strategy (it does not exist).

Response 6: Thank you for this comment. The areas of research differ slightly where some of the terminologies are common in one than the other.  The authors are economists and in  economics we refer to empirical strategy, to indicate the empirical method used in the estimation model.

Comment 7: The Results and Discussion section is written very clumsily. For example. The coefficient increases from 0.33* in model 1 to 0.046*** in model 3, … Which coefficient? When writing a scientific article, the author must be very precise and such data should not be missing.

Response 7: The results and discussion section is revised. The first sentence f paragraph 2 on page 9 indicate the variable for which the coefficients are discussed.   

Comment 8: The Discussion is too modest. In References you cited 5 pages of literature that you did not adequately connect with the findings of your research. The Conclusion section does not say much new.

Response 8: The references cited are all referred to in the introduction, or literature and theoretical framework or in the results discussion. The conclusion has been reworked on, to include policy recommendation based on the study findings.   

3. Point-by-point response to Comments and Suggestions for Authors

Comments and Suggestions for Authors

Dear Authors, Thank you for the opportunity to read your manuscript. I believe that some changes/clarifications are necessary to make the work suitable for publication.

Comments 1: Originality: although the paper faces some interesting arguments, the topic of originality should be better explained. First of all, the difference with the studies of Corrado et al. (2005) and Kotey and Folker (2007) should be better explained, otherwise there is the risk of having only a repetition of the previous studies. Furthermore, in this regard, the reason for the choice of sub-Saharan countries should also be better explained. Why should they be relevant? All this information on originality should be incorporated in a synthetic way in the introduction, in order to capture the attention of the readers.

Response 1: Thank you for the important comment. The Introduction section presents the arguments of why the research is important and it’s originality by showing the gap in research between developed and developing countries. This gap presents the essence of having Sub-Saharan counties in the study. The introduction has been revised and contribution of the study indicated on page 3 paragraph 3.

Comments 2: The title and the text introduce the firm performance. However, the authors use as a performance measure a quantity that expresses the efficiency of sales. Therefore, I suggest changing the generic term performance to something more specific and relevant.

Response 2: Thank you. The study focuses on role of internal knowledge on innovation in manufacturing firms on sub-Saharan African countries. It is further extended to assess the effect on innovation on firm performance. Given the set of data, where majority of the firms have not reported other performance measures such as profit, return on investments and due to a lot of missing values, the authors used a ratio of total annual sales to the total number of employees to measure firm performance.

Comment 3: Variables used: it could be useful to insert a summary table also specifying the sources. Moreover, I suppose that some explanation is needed.

Innovation dummy variable. Has anyone in the literature adopted your same approach? Was the criteria compliance done manually? Or how? The same for Formal Training variable.

"The firm's internal knowledge, the log-transformed main explanatory variable, is proxied by the average years of education of all permanent employees". Has anyone else used this type of variable? Does this variable come from the main dataset adopted?

Response 3: Thank you. The description of variables is presented on page 6 paragraph 2 and page 7 paragraphs 1-2, we preferred description in text format rather than having a table. Th sources of data are well explained in sub section 3.1-data where we have explained the data used for the study, to have been obtained from the WBES-World Bank data base.  Innovation is a dummy is this study and has been used by other studies- the questions of the world bank enterprise survey, specify innovation as a dummy with 4 different definitions: (i) introduced innovative manufacturing methods, (ii) implemented innovative logistics or delivery distribution methods for inputs, products, or services, (iii) introduced supporting activities for processes, such as maintenance systems or operational improvements in purchasing, accounting, or computing, or (iv) significantly launched a new product in the market. All variables come from the main world Bank data set.

Comment 4: The implications section should be increased. Also the limitations of the study should be further developed.

Response 4: we thank you for the raised comment on  implication and limitation of the study. The implication section has been improved. The limitation the study have been highlighted and included mostly on the limitation in data on page 7, last paragraph. The policy recommendation have been extensively discussed as recommended on pages 15-16 and future areas of research indicated on page 16 last paragraph. he

Comment 5: The bibliography must be in alphabetical order.

Response 5: Thank you, the bibliograph has been revised in the new and revised manuscript.

Comment 6: There are some formal/grammatical errors. For example, Investigates is written with a capital letter.

Response 6: Thank you for raising this observation, the whole revised manuscript have been revised and proof read, to ascertain there are no grammatical errors.

Comment 7: what does it mean when you write " with similar firm characteristics". How was the sample defined?

Response 7: Thank you for the comment. This is much appreciated. The meaning of  similar characteristics portrays that firms in the sample are selected based on the similar characteristics for example, they are manufacturing or s3rvices firms, formally registered in each country. The World Bank Enterprise Survey shows the criteria of these firms in sub-Saharan Africa.