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Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth

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  • André van Stel
  • Lorraine Uhlaner
  • Haibo Zhou
  • Valerie Duplat

Abstract

This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view.

Suggested Citation

  • André van Stel & Lorraine Uhlaner & Haibo Zhou & Valerie Duplat, 2012. "Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth," Scales Research Reports H201211, EIM Business and Policy Research.
    • Handle: RePEc:eim:papers:h201211
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    2. Jan de Kok & Sophie Doove & Peter Oeij & Karolus Kraan, 2014. "Scale effects in workplace innovations," Scales Research Reports H201402, EIM Business and Policy Research.
    3. Nieves, Julia & Haller, Sabine, 2014. "Building dynamic capabilities through knowledge resources," Tourism Management, Elsevier, vol. 40(C), pages 224-232.
    4. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.

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