Technological capabilities, open innovation and perceived operational performance in SMEs: the moderating role of environmental dynamism

Abstract

Purpose In the current dynamic environment, technological capabilities and open innovation play vital roles in operational performance of small and medium enterprises (SMEs). Thus, the purpose of this paper is to explore the influence of technological capabilities on open innovation and consequent impact on perceived operational performance of the SMEs in Malaysia by considering the moderating effect of environmental dynamism. Design/methodology/approach This study is quantitative in nature and used a survey questionnaire to gather responses from 202 SME owners in Malaysia. The data were analyzed with SmartPLS software, as it used structural equation modeling. Findings The results show that technological capabilities significantly influence open innovation whereas open innovation plays an instrumental role to achieve operational performance of the SMEs. Interestingly, environmental dynamism was found to have a negative moderating role in the relationship between open innovation and perceived operational performance. Practical implications This paper will assist SME managers in making effective decisions while using technological capabilities and open innovation practices. Managers need to be aware of the vital role of technological capabilities to build external and internal collaboration and incorporate their knowledge that is necessary for open innovation practices. The results also assist managers in a way that in the dynamic and competitive environment SMEs should take further proactive actions to compete in the market to survive. Originality/value This study provides new insights by dismantling technological capabilities and open innovation to understand further the effects of technological capabilities on open innovation and its consequence on a firm’s operational performance.

Worldwide Research on Open Innovation in SMEs

“…OI has been studied from the perspectives of absorptive capacity [35,[131][132][133][134], technological capabilities [135][136][137], dynamic capabilities [138,139], sustainability [140,141] and stakeholder theory [142][143][144][145]. Other scholars considered their benefits, examining firm performance [146][147][148][149][150], innovation performance [151][152][153][154] and customer performance [134].…”

“…In this decade, the research focused on the commitment of SMEs to assuming open innovation in their processes [3,27,118,119], the establishment and use of business models [120][121][122][123], business practices [31,[124][125][126] and the development of OI through local and global networks [127][128][129][130]. OI has been studied from the perspectives of absorptive capacity [23,35,[131][132][133], technological capabilities [134][135][136], dynamic capabilities [137,138], sustainability [139,140] and stakeholder theory [141][142][143][144]. Other scholars considered their benefits, examining firm performance [145][146][147][148][149], innovation performance [150][151][152][153] and customer performance [133].…”

Exploring the Evolution and Determinants of Open Innovation: A Perspective from Patent Citations

“…OI promotes its innovation performance by emphasizing the active seeking and absorption of external resources in its innovation activities [3]. For example, Procter & Gamble has improved its R&D efficiency by 60% through its OI strategy [4,5].…”

The Nexus Between Learning Orientation, TQM Practices, Innovation Culture, and Organizational Performance of SMEs in Kuwait

“…In order to understand what weakens SMEs' performance, many researchers have attempted to study various factors and predictors in creating efficient models to ensure continuous improvement of SMEs' performance, such as entrepreneurial leadership (Nor-Aishah et al, 2020), customer relationship management (CRM) (AlQershi et al, 2020), technological capabilities (Taghizadeh et al, 2020), knowledge management (Ferraris et al, 2019), entrepreneurial and market orientation (Mamun et al, 2018), and supply chain network (Z. Ali et al, 2019).…”