The Impact of Innovation on the Performance of Small and Medium Manufacturing Enterprises: Evidence from Malaysia

By M. Rosli, Syamsuriana Sidek. 2013

273 citations recorded by the source corpus.

At the firm level, intense competition under the global economic framework requires small and medium enterprises to reconsider their competitive position vis-a-vis their rivals, amongst others, through innovation. This justifies why innovation, in the last two decades, becomes a centre stage in small business literature, reports and government policy. Little attention, however, has been given to the possible impact of various dimensions of innovation on firm performance. Enriching the literature, this paper evaluates the impact of various innovation dimensions on the performance of SMEs. A total of 284 samples were collected from SMEs in the food and beverage, textiles and clothing and wood-based sub-industries throughout Malaysia. The data were analysed using a hierarchical regression analysis. The findings confirmed the hypotheses that product innovation and process innovation influenced firm performance significantly, where the impact of the former was stronger than the latter. Besides consolidating the existing theory on the importance of innovation for explaining a variation in firm performance, the findings also inform SMEs and policy makers that innovation is a critical factor in today's entrepreneurial activities. Further studies should look into how SMEs could calculate cost-benefit ratio of innovation and how they could opt for internal or external sources of innovation before actual innovation is undertaken.

Subfields: Business and International Management, Management of Technology and Innovation, Organizational Behavior and Human Resource Management

View Paper: https://www.semanticscholar.org/paper/14a09deb4f58b3d8e471358ab987141b9995316c

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In Business and International Management

In Management of Technology and Innovation

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Citations in the corpus

The Impact of Innovation on the Firm Performance and Corporate Social Responsibility of Vietnamese Manufacturing Firms (2019, background): “Rosli and Sidek [27] examined a sample of roughly 300 firms in the industry of a wide range of sectors in Malaysia.”
The effects of market orientation and innovation on competitive advantage and business performance of textile SMEs (2019, methodology): “Innovation dimensions that consist of product innovation, process innovation, market innovation were investigated thoroughly by Rosli and Sidek (2013) and in this study we use the items from this study.”
Innovation capabilities and performance: are they truly linked in SMEs? (2019, background): “…increase in quality and delivery methods of products, a better market position, more and better competitive advantages (O’Sullivan & Dooley, 2009; Gunday et al., 2011), as well as a higher level of business performance (Hilmi et al., 2010; Ar & Baki, 2011; Gunday et al., 2011; Rosli & Sidek, 2013).”