Innovation and firm performance: Evidence from malaysian SMEs
Keywords:
Product innovation, process innovation, mortality, SMEs performance, MalaysiaAbstract
The study is designed to examine and analyze the effects of product innovation and process innovation on firm performance of Small Medium Enterprises (SMEs) within the service industry in Malaysia. The populations of the respondents are owner managers of 150 SME firms, constituting 18% response rate. To test the relationship of the variables, Partial Least Squares Structural Equation Modeling (PLS-SEM) is utilized. Results of the analysis indicate that, product and process innovation positively impact as much as, 43% on overall firm’s performance. SME firms’ that emphasizes product and process innovation are proven to improve the performance. The study highlights that innovation is important aspect in all entrepreneurial activities that further ensure improved firm performance.
Kajian ini direka untuk mengkaji dan menganalisis kesan inovasi produk dan proses inovasi terhadap prestasi firma Perusahaan Kecil Sederhana (PKS) dalam industri perkhidmatan di Malaysia. Populasi responden adalah pengurus pemilik 150 firma PKS, yang membentuk kadar tindak balas 18%. Untuk menguji hubungan pemboleh ubah, Pemodelan Persamaan Struktur Secara Separa Separa (PLS-SEM) digunakan. Hasil analisa menunjukkan bahawa, inovasi produk dan proses mempunyai kesan positif sebanyak 43% terhadap prestasi keseluruhan firma. Syarikat PKS yang menekankan inovasi produk dan proses terbukti dapat meningkatkan prestasi. Kajian ini menekankan bahawa inovasi adalah aspek penting dalam semua aktiviti keusahawanan yang seterusnya memastikan peningkatan prestasi syarikat.
Kata kunci: innovasi produk, innovasi proses, penutupan syarikat, prestasi firm PKS, Malaysia.
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References
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Ancona, D. G., & Caldwell, D. F. (1992). Demography and design: Predictors of new product team performance. Organization Science, 3(3), 321-341.
Avermaete, T., Viaene, J., Eleanor, J., Morgan, N. C. (2003). Determinants of innovation in
small food firms. European. Journal of Innovation Management, Vol. 6 Issue: 1, pp.8-17, https://doi.org/10.1108/14601060310459163.
Camison, C. & Lopez, A. V. (2010). An Examination of the Relationship between Manufacturing Flexibility and Firm Performance: The Mediating Role of Innovation. International Journal of Operations & Production Management, 30(8), 853-878.
Craig, A. & Hart, S. (1992). Where to Now in New Product Development Research. European Journal of Marketing, 26(11), 1-49.
Cumming, B.S. (1998). Innovation overview and future challenges. European Journal of Innovation Management, 1(1), 21-9.
David. R. L., Ross. L. C., & Terry. R. S. (2007). Inter-relationship between innovation and market orientation in SMEs. Management Research New,30(12), 878-891.
Enkel, E., Gassmann, O., & Chesbrough, H. W. (2009). Open R&D and open innovation: Exploring the phenomenon. Journal of Research & Development Management, 39(4), 311–316.
EIM, (2010). Annual Report on EU Small and Medium-sized Enterprises. Retrieved from,
http://www.ec.europa.eu
Faul, F., Erdfelder, E., Lang, A.-G., & Buchner, A. (2007). G* Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior research methods, 39(2), 175-191.
Freeman, C. (1982). The Economics of Industrial Innovation, (2nd ed.), Frances Printer, London, UK.
Forker, L. B., Vickery, S. K. and Droge, C. L. (1996). The Contribution of Quality to Business Performance. International Journal of Operations and Production Management, 16(8), 44-62.
Gartner, W. B., & Shane, S. A. (1995). Measuring entrepreneurship over time. Journal of Small Business, 12(4), 11-32.
Garvin, D. A. (1987). Competing on the eight dimensions of quality. Harvard Business Review, 65(6), 101-109.
George, D., & Mallery, P. (2003). SPSS for Windows step by step: A simple guide and reference (4th, ed.) Boston: Allyn and Bacon.
Gopalakrishnan, S., & Damanpour, F. (1997). A Review Economics of Innovation Research in Sociology and Technology Management. Omega, 25(1), 15-28.
Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
Kalin, F. Z. (2014). Small innovative companies make a big difference. European View, 13, 161-7.
Kampschroeder, K. F., Ludwig, N., Murray, M. A., & Padmanabhan, P. (2008). The stitch house: A case of entrepreneurial failure. Journal of the International Academy for Case Studies, 14(3), 31-37.
Kim, W. C. Mauborgne, R. (2007). Blue ocean strategy. Leadership Excellence.
Jusoh, M. A, Halim, H. A., & Omar, B., (2015). The development technology based entrepreneur in Malaysia. Management Research Journal, 5(1), 27-37.
Langley, D.J., Pals, N. & Ort, J.R. (2005). Adoption of Behaviour: Predicting Success for Major Innovations. European Journal of Innovation Management, 8(1), 56-78.
Liao, J., Welsch, H., & Moutray, C. (2008). Start-up resources and entrepreneurial discontinuance: The case of nascent entrepreneurs. Journal of Small Business Strategy, 19(2), 1-15.
Mayanyn, L. M., & Maria, T. O. F. (2016). Identification of Innovation Capabilities for Micro and Small Enterprise in Morelos, Mexico. Review of Business & Finance Studies, 7(1), 79-92.
Merriam-Webster (2016). “Innovation”, in Merriam-Webster Dictionary. available at: www.merriamwebster.com/dictionary/innovation
Minna, S. (2014). Innovation capability for SME success: Perspective of financial and operational performance. Journal of Advance in Management Research.
Moullin, M. (2007). Performance measurement definitions: Linking performance measurement and organizational excellence. International Journal of Health Care Quality Assurance, 20(3), 181–183.
Myers, S. & Marquis, D.G. (1969). Successful Industrial Innovations. National Science Foundation, Washington, DC.
Neely, A., Gregory, M., & Platts, K. (1995). Performance measurement system design: A literature review and research agenda. International Journal of Operations & Production Management, 15(4), 80–116.
Neely, Andy. (2005). The Evolution of Performance Measurement Research – Developments in the Last Decade and a Research Agenda for the Next. International Journal of Operations & Production Management, 25, 1264-1277.
Noor Hazlina Ahmad & Pi-Shen Seet. (2009). Dissecting behaviours associated with business failure: A qualitative study of SMEs owners in Malaysia and Australia. Asian Social Science, 5(9).
NSDC (2007). SME Annual Report 2007: National SME Development Council.
OECD Oslo Manual (2005). Guidelines for Collecting and Interpreting Innovation Data, 3rd edition.
Oke, A., Burke, G., & Myers, A. (2003). Innovation types and their impact on performance in UK SMEs.
Penrose, E. T. (1959). The Theory of the Growth of the Firm. New York: John Wiley.
Sathe, V. (2003). Corporate entrepreneurship: Top managers and new business Creation. Cambridge: University Press.
Sekaran, U., & Bougie, R. (2010). Research Methods for Business: A skill Building Approach (5th ed). John Wiley and Sons Inc.
SME Annual Report. (2015/2016). Retrieved from,
http://www.smecorp.gov.my
Tan, K. S., Chong, S. C., Lin, B., & Eze, U. C. (2009). Internet-based ICT adoption: Evidence from Malaysian SMEs. Industrial Management & Data Systems, 109(2), 224 – 244.
Thorton, P. H. (1999). The sociology of entrepreneurship. Annual Review of Sociology, 25, 19-46.
US SBA. (2009). Starts and closures of employer firms, 2004-2008. Retrieved from,
http://www.sba.gov
US SBA. (2014). Retrieved from, http://www.sba.gov
Varis, M., & Littunen, H. (2010). Types of innovation, sources of information and performance in entrepreneurial SMEs. European Journal of Innovation Management, 13(2), 128-154
Wan, D., Ong, C.H. & Lee, F. (2005). Determinants of Firm Innovation in Singapore. Technovation, 25(3), 261-8.
Wang, C.L. & Ahmed, P.K. (2004). The Development and Validation of the Organizational Innovativeness Construct Using Confirmatory Factor Analysis. European Journal of Innovation Management, 7(4), 303-13.
Zhuang, L., Williamson, D. & Carter, M. (1999). Innovate or Liquidate – Are All Organisations Convinced: A Two-phased Study into the Innovation Process. Management Decision. (Online), vol. 37, .0. 1, (n.p.), Available: http://www.emeraldlibrary.com/brev/00137ag1.htm
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Published
2020-04-30
How to Cite
Gill, D. S., & Hanafi, N. (2020). Innovation and firm performance: Evidence from malaysian SMEs. Management Research Journal, 9(1), 51–59. Retrieved from https://ejournal.upsi.edu.my/index.php/MRJ/article/view/3160
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