Innovation Culture in SMEs: The Importance of Organizational Culture, Organizational Learning and Market Orientation

Abstract Academic and practitioner have considered innovation as an approach to produce value to customer in order to remain competitive in the market. However, previous studies on innovation culture among small and medium enterprises (SMEs) have received little attention and SMEs need to inculcate the innovation culture in order to generate innovation. Hence, the purpose of this paper is to investigate empirically the influence of organizational culture, organizational learning and market orientation on innovation culture. A questionnaire-based survey was conducted to gather data from SMEs in Malaysia. Questionnaires were distributed and gathered with a total of 183 usable responses. The analysis was conducted via SMART PLS to produce interesting findings. Findings suggest that all dimensions of organizational culture (adaptability, involvement, mission and consistency) have an influence on innovation culture, organizational learning in terms of information acquisition and behavioural & cognitive have an impact on innovation culture. Finally, only competitor orientation influences innovation culture. Although SMEs play an important role within the Malaysia economy, their contribution to innovation is small and marginal. This study makes an important contribution by providing information to SMEs on the elements that could nurture innovation culture in their organizations. As such, it is hoped that this study will generate interest among the researchers to reach more conclusive evidence about the practice of innovation culture among SMEs in Malaysia. More effort should be devoted to comprehending the concept of innovation culture among SMEs from the context of developing country. The findings combined with the suggestions may offer alternative insights on innovation culture and extend a basic framework for further investigation.