SMEs Performance in Malaysia: The Role of Contextual Ambidexterity in Innovation Culture and Performance

Mohamad Rohieszan Ramdan,Thuraiya Zakaria,Nor Liza Abdullah,Norsamsinar Samsudin,Sharon Yong Yee Ong,Nursyazwani Mohd Fuzi,Nurul Ashykin Abd Aziz,Gurcharanjit Singh Veer Singh

doi:10.3390/su14031679

Abstract

Small and medium-sized enterprises (SMEs) in both the industrial and service sectors have been identified as the drivers of Malaysia’s fast economic growth. However, SMEs are faced with an inherent issue of lack of resources and capabilities which constrains the ability of SMEs to improve performance. Due to this, it is critical for SMEs to understand and develop an important capability that supports them in facing a dynamic and competitive business environment. This study examines the mediating role of contextual ambidexterity as a dynamic capability in the relationship between innovation culture and SME performance. The online surveys were carried out starting from 5th July until 25th July 2021. A total of 277 SMEs in Selangor, Malaysia participated in this study and Covariance-Based Structural Equation modeling analysis was utilized to test the hypotheses. The findings show that in terms of direct relationships, innovation culture has a significant positive relationship with contextual ambidexterity, while innovation culture and contextual ambidexterity have a significant positive relationship with SME performance. The findings showed that contextual ambidexterity is significant as a mediator in the relationship between innovation culture and SME performance. This study makes an important contribution to the management field by highlighting the role of contextual ambidexterity, which is often the focus of large companies. These findings support the notion of dynamic capability that accentuates the importance of developing capabilities in dealing with dynamic and challenging situations.

Highlights

The value of R2 indicates that 66.0 per cent of the total variation in contextual ambidexterity can be explained by the innovation culture
The value of R2 indicates that 82.0 per cent of the variation that exists in Small and medium-sized enterprises (SMEs) performance can be explained by both variables, namely innovation culture and contextual ambidexterity
The results of the study indicate that the implementation of a higher innovation culture tends to contribute to a higher level of contextual ambidexterity

Summary

Introduction

Small and medium enterprises (SMEs) in the manufacturing and services sectors play an important role in the economy and are acknowledged to be the backbone of economic development. This is because the main importance of entrepreneurship is to create job opportunities, enhance innovation, and improve the economy [1,2,3]. Emerging trends have seen a surge in the number of SMEs in Malaysia, which recorded an increase from. SMEs in Malaysia contributed 38.2 percent of Gross Domestic Product (GDP) in 2021 [5], and accounted for

Methods

Results

Discussion

Conclusion