This paper aims to examine the role of management practices (MP) in influencing firm innovation and productivity in Nepalese manufacturing firms. Furthermore, it also explores the mediating effect of innovation and the moderating effect of financial constraints on MP.
The data were collected using the purposive sampling method from 305 managers and senior executives in Nepalese manufacturing firms, through self-administered questionnaires. The results were assessed using the measurement and structural models.
This study finds that MP have a positive and significant influence on the innovation and productivity of manufacturing firms in a least-developed economy. Also, it finds that innovation partially mediates the MP–productivity relationship in a manufacturing firm, while financial constraints exhibited weak, non-significant moderation.
This model confirms the hypothesised relationships among MP, innovation and productivity in manufacturing firms in Nepal. It also shows the positive impact of MP on productivity and the partial mediation of innovation on the MP–productivity.
The research findings can inform manufacturing firms in developing economies on how MP can foster innovation, which eventually enhances the productivity of firms. It also makes the management of manufacturing firms aware of the directional significance of innovation in strengthening the MP–productivity link.
In a developing country like Nepal, these results show that factories can raise output by managing people and processes better without big loans or expensive machines. This can mean higher wages, safer and more respectable jobs, fewer young people leaving for work abroad, fairer growth across regions and a stronger belief that ordinary Nepalis can improve their own lives.
There are fewer studies examining the relationship between MP, their mediators and outcomes in the least-developed countries context, such as Nepal. Also, limited studies have examined how financial constraints impact the MP–productivity link from a developing market perspective in Asia.
