An empirical study to explore the interplay of Managerial and Operational capabilities to infuse organizational innovation in SMEs

Abstract This study aims to explore and examine the relationship of managerial capability and operational capability to infuse organizational innovation in small and medium-sized enterprises by proposing and empirically validating a rigorous capability-based model. This study conceptualized managerial capability by considering decision making, management style, and people development whereas operational capability is conceptualized by considering process management and performance management under the umbrella of Resource-based view theory, dynamic capability and organizational capability perspective. Partial least squares structural equation modelling (PLS-SEM) is employed to test the model hypotheses and importance-performance map analysis (IPMA) provides information about the significance and relevance of the key dimensions of managerial and operational capability which explain and help to infuse organizational innovation. The empirical data is gathered through questionnaires distributed across 210 SMEs. The results exhibit strong and significant relationships among managerial capability, operational capability and organizational innovation where majority of the hypothesis are supported by the empirical results. The results are practical in nature as they may help SMEs to gain a holistic view of the relationship between managerial and operational capability and their influence on organizational innovation.

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