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Impact of Innovation Culture, Organization Size and Technological Capability on the Performance of SMEs: The Case of China

Author

Listed:
  • GuoXiang Tang

    (Hyundai Motor Group, Beijing 101300, China)

  • Kwangtae Park

    (Korea University Business School, Korea University, Seoul 02841, Korea)

  • Anurag Agarwal

    (College of Business, Florida Gulf Coast University, Fort Myers, FL 33965, USA)

  • Feng Liu

    (Korea University Business School, Korea University, Seoul 02841, Korea)

Abstract

Small and medium-sized enterprises (SMEs) in both the manufacturing and service sectors have been viewed as an important driving force behind the rapid economic growth in China. There are multiple factors that drive the success of SMEs. In this paper, we study the effect of innovation culture, technological capability, and organization size on the performance of SMEs in China. We hypothesize that firm performance is positively affected by each of these factors. We use data from 1124 SMEs in China and apply regression analysis to test our hypotheses. We find that technological capability and organization size have a statistically positive effect on the performance of SMEs. Because manufacturing and service industries have distinct characteristics, we also compare the effects of these factors on firm performance within these industries. We find that technological capability is positively and statistically significantly related to firm performance in the manufacturing industry but not in the service industry, while innovation culture is positively and statistically significantly related to firm performance in the service industry but not in the manufacturing industry.

Suggested Citation

  • GuoXiang Tang & Kwangtae Park & Anurag Agarwal & Feng Liu, 2020. "Impact of Innovation Culture, Organization Size and Technological Capability on the Performance of SMEs: The Case of China," Sustainability, MDPI, vol. 12(4), pages 1-14, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1355-:d:319821
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    4. Kusnandar & Setyowati, Nuning & Wida Riptanti, Erlyna, 2023. "Creating an innovative culture in agribusiness of micro, small and medium-sized enterprises," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(2), June.
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    8. Mehmet Civelek & Aleksandr Kljucnikov & Vendula Fialova & Andrea Folvarcna & Milan Stoch, 2021. "How innovativeness of family-owned SMEs differ depending on their characteristics?," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 413-428, June.
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