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The Role of Innovation Capability in Enhancing Sustainability in SMEs: An Emerging Economy Perspective

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  • HMJCB Heenkenda

    (School of Management, Wuhan University of Technology, Wuhan 430070, China
    Faculty of Management Studies, The Open University of Sri Lanka, Nugegoda 10250, Sri Lanka)

  • Fengju Xu

    (School of Management, Wuhan University of Technology, Wuhan 430070, China)

  • KMMCB Kulathunga

    (Faculty of Management, Uva Wellassa University of Sri Lanka, Badulla 90000, Sri Lanka)

  • WAR Senevirathne

    (Faculty of Management Studies, The Open University of Sri Lanka, Nugegoda 10250, Sri Lanka)

Abstract

Today, we are living in the knowledge century. Knowledge-based intangible resources in enhancing sustainable growth of small and medium enterprises (SMEs) is presently a significant scope of research. Innovation capability is the intuitive skill of an individual or a firm to transform an explicit concept towards value orientation that carries an economic value. This economic value would then lead to wealth creation and eventually result in sustainable SMEs. The SME sector has been highlighted for its significant contribution towards the creation of employment, opportunity for innovation and economic dynamism. In this study, evidence derived from knowledge-based view and knowledge creation theory was used to construct a structured model to analyze the relationships among innovation capability, disruptive technology and knowledge creation and their impacts on SMEs sustainability. A sample of 384 owners of SMEs in Sri Lanka was included in the study. The outcome of structural equation modelling (SEM) discovered positive effects of innovation capability, disruptive technology and knowledge creation on sustainability. Innovation capability also emerged as a predictor of disruptive technology and knowledge creation. Moreover, disruptive technology and knowledge creation were found to be partial mediators of the association between innovation capability and SMEs’ sustainability. These findings pave the way for policy makers to promote sustainability in SMEs, by assisting to enhance their performance in competitive and innovative economic environments. Further, the validated model can be empirically tested in future research.

Suggested Citation

  • HMJCB Heenkenda & Fengju Xu & KMMCB Kulathunga & WAR Senevirathne, 2022. "The Role of Innovation Capability in Enhancing Sustainability in SMEs: An Emerging Economy Perspective," Sustainability, MDPI, vol. 14(17), pages 1-22, August.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:17:p:10832-:d:902201
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    2. Sylvia Novillo-Villegas & Patricia Acosta-Vargas & Christian Cruz-Boada & Mateo Garzon & Andre Marin-Dett & Wendy Anzules-Falcones, 2022. "Sustaining the Path for Innovation Capability from a Developing Country Perspective: A Conceptual Framework," Sustainability, MDPI, vol. 14(19), pages 1-26, October.
    3. OMENKA Johnson Chuku & BABALOLA Yemisi Tomilola (Ph. D), 2023. "Information Technology Competence and Innovation in Small and Medium Enterprises," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(7), pages 873-880, July.
    4. Yunjeong Kim & Hannah Jun, 2022. "Exploring Technology Innovation Factors, Government Support and Performance of Development-Related Social Enterprises: Evidence from South Korea," Sustainability, MDPI, vol. 14(22), pages 1-18, November.
    5. Aidin Salamzadeh & Morteza Hadizadeh & Niloofar Rastgoo & Md. Mizanur Rahman & Soodabeh Radfard, 2022. "Sustainability-Oriented Innovation Foresight in International New Technology Based Firms," Sustainability, MDPI, vol. 14(20), pages 1-21, October.

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