Abstract

The purpose of this study is to investigate the complex link that exists between market competition, financial constraints, and innovative behavior inside manufacturing businesses. In this study, the behavioral theory of the firm and resource-based perspectives are utilized to investigate the dynamic relationship between financial restrictions and the level of competitive intensity that influences the strategic decisions that companies make about innovation. The research makes use of firm-level data from the manufacturing industry and use panel econometric methods in order to evaluate the moderating influence of financial access on the connection between competitive pressure and innovation outcomes. The findings of the empirical research reveal that increasing competition is beneficial to innovation incentives; however, the presence of funding limits significantly hinders the ability of businesses to transform these incentives into tangible innovation activities. In addition, businesses that have management structures that are adaptable and cultures that foster learning are better equipped to deal with financial issues, which enables them to transform competitive strain into innovative ways of improving performance. The findings demonstrate how crucial it is to take into account the availability of financial resources, the adaptability of management, and the dynamics of the market in order to foster long-term creative behavior. In order to strengthen industrial competitiveness and maintain long-term productivity, policy implications highlight the importance of specialized financial instruments, financing mechanisms that facilitate innovation, and regulatory frameworks that are competitive.