Interlinkages of Sustainability, Innovation, Market Integration, and Global Value Chain Governance in Ethiopia’s Integrated Agro-Industrial Parks

This study investigates the interconnections between sustainability practices, innovation, market integration, and Global Value Chain (GVC) governance within Ethiopia’s Integrated Agro-Industrial Parks (IAIPs). It addresses key challenges faced by IAIPs in promoting sustainability, fostering innovation, and achieving global market integration, providing insights into how sustainability-driven innovation can enhance market access and competitiveness. A quantitative, deductive research design was adopted, utilizing a stratified sampling technique across two IAIPs, Bulbula and Yirgalem. Data were collected through questionnaires from 160 respondents, and Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to examine the direct and indirect relationships among sustainability, innovation, market integration, and GVC governance. The findings demonstrate that sustainability practices significantly promote innovation (β = 0.504, p < 0.001), which in turn boosts market integration (β = 0.422, p < 0.001) and strengthens GVC governance (β = 0.589, p < 0.001). Mediation analysis indicates that innovation partially mediates the effect of sustainability on market integration, while both innovation and market integration fully mediate sustainability’s impact on GVC governance. This research underscores the critical role of sustainability-driven innovation in improving market integration and GVC governance in IAIPs, suggesting that incorporating sustainability practices can enhance global competitiveness. The findings provide valuable insights for policymakers and industry stakeholders seeking to strengthen IAIPs' global market position.