Organisational Capabilities and Small And Medium Sized Firms’ Attainment Of Innovation Outcomes: The Moderating Roles Of Exports And Formal Business Networks

Liu, Gordon; Liu, Weixi and Ko, Wai Wai (2022). Organisational Capabilities and Small And Medium Sized Firms’ Attainment Of Innovation Outcomes: The Moderating Roles Of Exports And Formal Business Networks. International Journal of Operations and Production Management, 42(7) pp. 1022–1060.

DOI: https://doi.org/10.1108/IJOPM-09-2021-0600

Abstract

Purpose:
We examine the influence of planning and execution capability (PEC) and operational improvement capability (OIC) on small-and-medium-sized firms’ (SMEs) attainment of different innovation outcomes under the conditions of exports and formal business networks, based on the capability-based perspective and organisational learning literature.

Design/methodology/approach:
We analyse time-series data about UK SMEs, extracted from the 2015 and 2016 UK Longitudinal Small Business Surveys (LSBS).

Findings:
We failed to find any direct effects of PEC and OIC on product innovation outcomes. However, we discovered that OIC supports the generation of process innovation outputs more strongly than PEC. Additionally, exports and formal business networks provide SMEs with different learning opportunities. We find limited support that exports amplify the beneficial effect of PEC on product innovation outcomes more than formal business networks. On the other hand, formal business networks strengthen the effect of PEC on process innovation outcomes more than exports. As a result, exports reduce the beneficial effect of OIC on product innovation outcomes more than formal business networks. However, formal business networks weaken the beneficial effect of OIC more than exports.

Originality:
We distinguish between two types of organisational capabilities - PEC and OIC - and examine their impact on SMEs in achieving innovation outcomes. We also identify SMEs’ involvement in exports and formal business networks as the important boundary conditions for such effects

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