Organisational creativity on product innovation performance of SMEs: exploring mechanisms and boundary conditions

Abstract

ABSTRACT Given the increasing level of uncertainty surrounding the current business environment, organisational creativity has become even more crucial and urgent if firms are to recover and survive. Based on survey data from 223 small and medium-sized enterprises (SMEs), this paper draws on the resource-based view (RBV) to explore mechanisms and boundary conditions by examining organisational creativity on product innovation performance of SMEs in Ghana. The results show that both novelty and usefulness dimensions of organisational creativity are positively related to SMEs product innovation performance with usefulness having greater impact. Design management capabilities (DMC) partially mediates the effect of novelty and usefulness dimensions of organisational creativity on product innovation performance. Interestingly, high levels of market awareness deteriorate the indirect effect of both novelty and usefulness on firm product innovation performance, via DMC. Our paper enriches the RBV of the firm by highlighting that organisational creativity-product innovation performance relationship is more complex than previously noted, as SMEs require significant financial resources, human capital and institutional support to be successful in a dynamic market environment. If SMEs intend to regularly achieve product differentiation advantage and deny their competitors from gaining customer loyalty, they may consider investing in DMC which is as important as creativity in enhancing product innovation performance.