The Role of Financial Slack, Employee Creative Self-Efficacy and Learning Orientation in Innovation and Organizational Performance

Khoa Tran,Linh Nguyen,Phuong Nguyen

doi:10.3390/admsci8040082

Abstract

Organizational performance development and financial slack have drawn extensive attention in management research. Recent studies have indicated that financial slack has a positive effect on innovation outcomes and organizational performance. However, some other studies have proposed adverse effects. This paper aimed to explore the causal linkages between employee creative self-efficacy, learning orientation, financial slack, innovation outcomes and organizational performance. It also examined the influence of innovation performance and creative self-efficacy as mediating variables in the connection between learning orientation and organizational performance. By doing so, we used a structural equation modelling (SEM) method to test the model using data from 267 small medium enterprises (SMEs) in Vietnam. The findings illustrated that SMEs had not utilized financial slack to invest in innovation activities and improve firm performance. Furthermore, the results indicated that learning orientation had both direct and indirect impacts on innovation and firm performance. It is worth noting that employee creative self-efficacy had a positive effect on innovation performance. The findings also verified a statistically significant association between innovation and organizational performance. Finally, the results provided some managerial implications to stimulate employees to work creatively and improve innovation outcomes for sustainable development.

Highlights

Since the implementation of economic reform in 1986, the Vietnamese government has developed a potential local market and economic infrastructure that maintains strong economic growth
The testing results showed that the corrected item-total correlations of all items were greater than 0.3, which satisfy the reliability of the measurement requirement (George and Mallery 2000)
This paper attempted to investigate the role of organizational learning and employee creativity in predicting innovation performance and organizational performance in small medium enterprises (SMEs) in Vietnam

Summary

Introduction

Since the implementation of economic reform in 1986, the Vietnamese government has developed a potential local market and economic infrastructure that maintains strong economic growth. In Vietnam, SMEs are identified by the government as having a registered capital of $326,000 (or less than $5 billion) and less than 200 employees. SMEs in Vietnam plays an essential role in the industrialization process of the country. Economic reforms in the past decade have directly stimulated the performance of Vietnamese SMEs and promoted diversification and improved trade and business opportunities. According to the information from the Ministry of Justice, Vietnam in the past few years practised a strong growth of SMEs getting 97% of the total number of businesses in the nation

Objectives

Methods

Results

Discussion

Conclusion