The Mediating Effect of Innovation Capability Towards Export Performance of Small and Medium Enterprises in Sri Lanka

Abstract

Export is one of the most important factors influencing economic growth. As a developing country, a systematic action plan is needed to expand the export sector because Sri Lanka’s economy is largely dependent on international trade. Small and Medium-Sized Enterprises (SMEs) play a vital role to develop the export performance of a country. entrepreneurial orientation and innovation capabilities are important factors that directly affected on internationalization of SMEs. There is no research done in the past to identify the mediating effect of innovation capability on the relationship between entrepreneurial orientation and export performance. Accordingly, this study intended to fill the gap by testing the mediating effect of innovation capability on the relationship between entrepreneurial orientation and export performance. In this context, the objective of this research is to examine the mediating effect of Innovation capabilities on the relationship between entrepreneurial orientation and export performance of SMEs in Sri Lanka. This study followed a quantitative research design to examine the above relationship by using the processing technique. The examined population in this research are the exporters who have export turnover below Rs. 150 Mn. Data is collected through a structured questionnaire distributed among 200 exporters. Both descriptive and inferential statistical techniques were used to analyze the collected data using SPSS. The study found that innovation capability has a partial mediation effect on the relationship between entrepreneurial orientation and export performance. Accordingly, SMEs should improve the level of entrepreneurial orientation and, innovation capability to improve the export performance of SMEs.