Abstract
It has long been acknowledged that SMEs contribute significantly to the overall economic performance in Malaysia. However, SMEs in Malaysia are yet to reach their full potential. To improve the performance of SMEs, understanding its drivers is crucial. Previous research found that organization which have a more innovative behavior are likely to initiate an organizational change that could affect organizational performance. Thus, the aim of this study is to investigate the relationship between organizational innovation and organizational performance of Malaysian SMEs. Therefore, this article discusses the concept of organizational innovation, organizational performance and end with the findings of the organizational innovation-organizational performance linkage. Data was collected from SMEs in manufacturing sectors. A total of 321 self-administered questionnaires were used for gathering data from the respondents. Smart PLS 2.0 was used to test the hypotheses. The result reveals a positive relationship between organizational innovation and organizational performance. This study is useful for future researchers, entrepreneurs and policy makers in realizing the importance of organizational innovation towards enhancing SMEs performance.
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