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