Cultivating success: organizational culture’s influence on innovation and performance in SMEs

Abstract

Organizational culture has a complex association with innovation and SME performance. This study explores the contextual associations between organizational culture, distinct innovation types, and SME performance in an under-researched African setting. Examining data from 382 SMEs, the study integrates the Oslo Manual’s four unique innovation types to address an oversight in previous studies. Smart PLS 4 analysis reveals that while organizational culture positively spurs product, process, marketing, and organizational innovation, it intriguingly hinders SME performance. Product innovation is the most vital driver of SME performance, surpassing process, marketing, and organizational innovations. The mediation analysis underscores a significant discrepancy: marketing innovation’s failure to mediate the organizational culture-performance relationship, setting it apart from other innovation types. This study uncovers the multifaceted impact of diverse innovation activities on performance in emerging economy SMEs. For practitioners and policymakers, these findings highlight the strategic importance of fostering a conducive organizational culture and specific innovation capabilities to enhance SME competitiveness.

Keywords

• Organizational culture
• innovation
• SME performance
• emerging economy
• structural equation modelling
• Entrepreneurship