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The Impact of Managerial and Adaptive Capabilities to Stimulate Organizational Innovation in SMEs: A Complementary PLS–SEM Approach

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  • Zulfiqar Ali

    (Department of Systems Engineering and Engineering Management (SEEM), City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong, China)

  • Hongyi Sun

    (Department of Systems Engineering and Engineering Management (SEEM), City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong, China)

  • Murad Ali

    (Department of HRM, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia)

Abstract

The aim of this study is to empirically explore and propose a rigorous model for the positive impact of managerial capability (in terms of decision-making, management style, people development, and succession planning) and adaptive capability (in terms of horizon scanning, change management, and resilience) on organizational innovation in the context of small and medium-sized enterprises (SMEs). The study uses partial least squares structural equation modeling (PLS–SEM) to test the model hypotheses, and importance-performance matrix analysis (IPMA) to provide information regarding the significance and relevance of the dimensions of managerial and adaptive capability in explaining organizational innovation in the proposed model. The empirical data is gathered through questionnaires from 210 SMEs. The results show a strong and significant relationship between managerial capability, adaptive capability, and organizational innovation. This study found that all of the dimensions of managerial capability and adaptive capability help to develop and improve the performance of organizational innovation in SMEs. The study concludes with a comprehensive discussion of the research limitations, and provides suggestions for future research.

Suggested Citation

  • Zulfiqar Ali & Hongyi Sun & Murad Ali, 2017. "The Impact of Managerial and Adaptive Capabilities to Stimulate Organizational Innovation in SMEs: A Complementary PLS–SEM Approach," Sustainability, MDPI, vol. 9(12), pages 1-23, November.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:12:p:2157-:d:120057
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