Purpose: The role of small and medium-scale enterprises (SMEs) in economies all over the world is well established as a vital propeller of economic growth and other macroeconomic balances. Thus, the growth of SMEs has been at the center of scholarly debates since the last decade, with many factors including financial management practices as well as innovative practices, contributing to the extensive study of the performances of SMEs. However, with unpopular arguments in literature in the context of financial management practices and SMEs’ innovative performances, this study attempts to explore how prudent financial management practices could inform SMES’ innovative performances. Methodology: Being a conceptual paper, the methodology adopted is explorative in nature, where literature was extensively explored in line with the research aim and specific study objectives. Findings: The outcome of the explorative literature study revealed that financial management practices are important determinants of SMEs’ innovative performances. This shows that working capital management, investment appraisal and analysis, financial information system management, financing and capital structure management are practices that SMEs must incorporate to foresee and take advantage of innovative opportunities that will lead to innovative performances Unique Contribution to Theory, Policy and Practice: This conceptual paper adds fresh arguments to the existing literature on financial management practices, innovation, and SMEs' performances by hypothesizing a positive relationship between different financial management practices (particularly, working capital management, investment assessment practices, financing and capital structure management, as well as financial information system management) and the innovative performances of SMEs. Thereby, we are ushering in a gateway for new empirical studies on the phenomenon of financial management practices and innovative performances of SMEs. In addition, SMEs’ owners and manager can leverage on the implications of this study to inform practical decisions on various financial management practices.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
customersupport@researchsolutions.com
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.