Social Capital as Innovative Performance Driver in SMEs: Leveraging on Innovation Culture and Government Support

Abstract

Innovation creates value for customers and helps companies to stay competitive in the market. It is however found that little attention has been given in previous studies in looking at innovation culture among Small and Medium Enterprises (SMEs). Given that innovation provides a competitive advantage for SMEs, they hence need to inculcate innovation culture within themselves in order to achieve their business performance objectives. The purpose of this study is to investigate the importance of innovation culture towards innovation performance and the influence of social capital (relational capital and social network) on innovation culture. Additionally, government support will also be investigated as it mediates between innovation culture and performance in the growth of SMEs in Malaysia. A quantitative method design was employed in this research to produce interesting findings. Research findings indicate that social capital has a significant impact on innovation culture, but an indirect impact on innovation performance. Government support also plays an important role in strengthening the link between innovation culture and performance. This study contributes to our understanding of the factors that promote the innovation culture within business organizations. As such, it is hoped that this study will encourage researchers to establish more definitive evidence on the culture of innovation among Malaysian SMEs, thereby creating the basic framework for further investigation.