Does the Innovation Capability and Competency Affect the Innovation Performance of Malaysian’s SMES?

Abstract

This paper intends to address how SMEs perceive the importance of the innovation-based capability and competency elements in their operations. Before any effort is made on improvising the SMEs’ performance, their perceptions of the importance of the innovation-based capability and competency elements must be understood by the change agents. Only upon understanding their perceptions can appropriate remedial and advisory steps be taken to assist them in their businesses. The issues of innovation have attracted much attention from research and industry in recent years; however, research has mostly focused on large enterprises with more resources, infrastructure, and capabilities, which leads to establishing innovation management. The combination of organisational, financing, owner, product or process, performance, and creative output elements has been considered significant in achieving success in SME businesses. The methodology used in this study includes purposive sampling involving 213 SME owners/managers selected from the Ministry of International Trade and Industry’s (MITI) list as the respondents of the study. The data were collected through survey questionnaires, while the frequency and descriptive analysis were used to derive the findings. The findings indicated that SME owners place the right importance on the elements of innovation capability, innovation competency. Meanwhile, for innovation output, they place the right importance on performance but less importance on creative output. Hence, the change agents must develop more awareness among SME owners regarding the importance of creative outputs as the most important determinant in the sustainability of innovation in their businesses.