Business model innovation and growth of manufacturing SMEs: a social exchange perspective

Abstract

PurposeThis study investigates business model innovation in small- and medium-sized manufacturing enterprises (SMEs) and its impact on firm growth.Design/methodology/approachThe study was based on analyzing data collected through a questionnaire survey. Structural equation modeling was applied to test the hypotheses.FindingsBusiness model innovation has a positive effect on SME growth in the manufacturing sectors. Moreover, growth is also achieved through the indirect effect of business model innovation on customer trust and commitment.Practical implicationsManagers will benefit from understanding how business model innovation can help their companies to overcome resource constraints and achieve sustained growth. When manufacturing SMEs engage in modular or structural changes to their business model, they may find it worthwhile to focus on maintaining a relationship of trust and commitment with their customers.Originality/valueThis study highlights business model innovation as a unique and important, yet underexplored, factor in manufacturing SME growth. The findings also untangle the complex processes of customer relationship management by which business model innovation improves manufacturing competitive advantage for SMEs.