IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v12y2020i4p1355-d319821.html
   My bibliography  Save this article

Impact of Innovation Culture, Organization Size and Technological Capability on the Performance of SMEs: The Case of China

Author

Listed:
  • GuoXiang Tang

    (Hyundai Motor Group, Beijing 101300, China)

  • Kwangtae Park

    (Korea University Business School, Korea University, Seoul 02841, Korea)

  • Anurag Agarwal

    (College of Business, Florida Gulf Coast University, Fort Myers, FL 33965, USA)

  • Feng Liu

    (Korea University Business School, Korea University, Seoul 02841, Korea)

Abstract

Small and medium-sized enterprises (SMEs) in both the manufacturing and service sectors have been viewed as an important driving force behind the rapid economic growth in China. There are multiple factors that drive the success of SMEs. In this paper, we study the effect of innovation culture, technological capability, and organization size on the performance of SMEs in China. We hypothesize that firm performance is positively affected by each of these factors. We use data from 1124 SMEs in China and apply regression analysis to test our hypotheses. We find that technological capability and organization size have a statistically positive effect on the performance of SMEs. Because manufacturing and service industries have distinct characteristics, we also compare the effects of these factors on firm performance within these industries. We find that technological capability is positively and statistically significantly related to firm performance in the manufacturing industry but not in the service industry, while innovation culture is positively and statistically significantly related to firm performance in the service industry but not in the manufacturing industry.

Suggested Citation

  • GuoXiang Tang & Kwangtae Park & Anurag Agarwal & Feng Liu, 2020. "Impact of Innovation Culture, Organization Size and Technological Capability on the Performance of SMEs: The Case of China," Sustainability, MDPI, vol. 12(4), pages 1-14, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1355-:d:319821
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/12/4/1355/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/12/4/1355/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ng, Linda F. Y. & Tuan, Chyau, 2003. "Location decisions of manufacturing FDI in China: implications of China's WTO accession," Journal of Asian Economics, Elsevier, vol. 14(1), pages 51-72, February.
    2. John M. Abowd & David S. Kaplan, 1999. "Executive Compensation: Six Questions That Need Answering," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 145-168, Fall.
    3. Joris Meijaard & Maryse Brand & Marco Mosselman, 2005. "Organizational Structure and Performance in Dutch small Firms," Small Business Economics, Springer, vol. 25(1), pages 83-96, August.
    4. Cenk Gokce Adas & Bibigul Tussupova, 2016. "Effects of the Global Financial Crisis on Chinese Economy," International Journal of Social Science Studies, Redfame publishing, vol. 4(4), pages 136-150, April.
    5. Zhongfeng Su (苏中锋) & Jisheng Peng (彭纪生) & Hao Shen (沈灏) & Ting Xiao (肖婷), 2013. "Technological Capability, Marketing Capability, and Firm Performance in Turbulent Conditions. 技术能力、市场能力与企业绩效：基于环境不确定性的研究," Management and Organization Review, The International Association for Chinese Management Research, vol. 9(1), pages 115-137, March.
    6. Lim Ee Shiang & Shyamala Nagaraj, 2011. "Impediments to innovation: evidence from Malaysian manufacturing firms," Asia Pacific Business Review, Taylor & Francis Journals, vol. 17(2), pages 209-223, April.
    7. Zahra, Shaker A. & Hayton, James C., 2008. "The effect of international venturing on firm performance: The moderating influence of absorptive capacity," Journal of Business Venturing, Elsevier, vol. 23(2), pages 195-220, March.
    8. Lau, Chung-Ming & Ngo, Hang-Yue, 2004. "The HR system, organizational culture, and product innovation," International Business Review, Elsevier, vol. 13(6), pages 685-703, December.
    9. Samiee, Saeed & Walters, Peter G. P., 1990. "Influence of firm size on export planning and performance," Journal of Business Research, Elsevier, vol. 20(3), pages 235-248, May.
    10. Feng Liu & Kwangtae Park & Unjung Whang, 2019. "Organizational Capabilities, Export Growth and Job Creation: An Investigation of Korean SMEs," Sustainability, MDPI, vol. 11(14), pages 1-16, July.
    11. Kevin B. Hendricks & Vinod R. Singhal, 2005. "Association Between Supply Chain Glitches and Operating Performance," Management Science, INFORMS, vol. 51(5), pages 695-711, May.
    12. Krzysztof Malik & Anna Jasińska-Biliczak, 2018. "Innovations and Other Processes as Identifiers of Contemporary Trends in the Sustainable Development of SMEs: The Case of Emerging Regional Economies," Sustainability, MDPI, vol. 10(5), pages 1-17, April.
    13. Martín-de Castro, Gregorio & Delgado-Verde, Miriam & Navas-López, José E. & Cruz-González, Jorge, 2013. "The moderating role of innovation culture in the relationship between knowledge assets and product innovation," Technological Forecasting and Social Change, Elsevier, vol. 80(2), pages 351-363.
    14. Katriina Soini & Joost Dessein, 2016. "Culture-Sustainability Relation: Towards a Conceptual Framework," Sustainability, MDPI, vol. 8(2), pages 1-12, February.
    15. Richard A. Bettis & Michael A. Hitt, 1995. "The new competitive landscape," Strategic Management Journal, Wiley Blackwell, vol. 16(S1), pages 7-19.
    16. Zongke Bao, 2016. "Innovative behavior and the Chinese enterprise survival risk: an empirical research," China Finance and Economic Review, Springer, vol. 4(1), pages 1-20, December.
    17. Zoltan Acs & David Audretsch, 1990. "Innovation and Small Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011131, December.
    18. Tuan, Chyau & Ng, Linda F. Y., 2003. "FDI facilitated by agglomeration economies: evidence from manufacturing and services joint ventures in China," Journal of Asian Economics, Elsevier, vol. 13(6), pages 749-765, January.
    19. Petra Andries & Ute Stephan, 2019. "Environmental Innovation and Firm Performance: How Firm Size and Motives Matter," Sustainability, MDPI, vol. 11(13), pages 1-17, June.
    20. Atuahene-Gima, Kwaku, 1996. "Market orientation and innovation," Journal of Business Research, Elsevier, vol. 35(2), pages 93-103, February.
    21. Su, Zhongfeng & Peng, Jisheng & Shen, Hao & Xiao, Ting, 2013. "Technological Capability, Marketing Capability, and Firm Performance in Turbulent Conditions," Management and Organization Review, Cambridge University Press, pages 115-138.
    22. Su, Zhongfeng & Peng, Jisheng & Shen, Hao & Xiao, Ting, 2013. "Technological Capability, Marketing Capability, and Firm Performance in Turbulent Conditions," Management and Organization Review, Cambridge University Press, vol. 9(1), pages 115-137, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kusnandar & Setyowati, Nuning & Wida Riptanti, Erlyna, 2023. "Creating an innovative culture in agribusiness of micro, small and medium-sized enterprises," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(2), June.
    2. Qian Ma & Weiwei Wu & Yexin Liu, 2021. "The Fit between Technology Management and Technological Capability and Its Impact on New Product Development Performance," Sustainability, MDPI, vol. 13(19), pages 1-12, October.
    3. Hernita Hernita & Batara Surya & Iwan Perwira & Herminawaty Abubakar & Muhammad Idris, 2021. "Economic Business Sustainability and Strengthening Human Resource Capacity Based on Increasing the Productivity of Small and Medium Enterprises (SMEs) in Makassar City, Indonesia," Sustainability, MDPI, vol. 13(6), pages 1-36, March.
    4. Qaisar Ali & Hakimah Yaacob & Shazia Parveen & Zaki Zaini, 2021. "Big data and predictive analytics to optimise social and environmental performance of Islamic banks," Environment Systems and Decisions, Springer, vol. 41(4), pages 616-632, December.
    5. Ismail J. Ismail, 2022. "Entrepreneurial Start-up Motivations and Growth of Small and Medium Enterprises in Tanzania: The Role of Entrepreneur’s Personality Traits," FIIB Business Review, , vol. 11(1), pages 79-93, March.
    6. Jeong-min Ryu & Sewon Park & Yoonseo Park & Jeongwon Park & Munjae Lee, 2021. "Innovative Culture and Firm Performance of Medical Device Companies: Mediating Effects of Investment in Education and Training," IJERPH, MDPI, vol. 18(17), pages 1-14, August.
    7. Qiao Liang & Rongrong Bai & Zhi Jin & Linlin Fu, 2023. "Big and strong or small and beautiful: Effects of organization size on the performance of farmer cooperatives in China," Agribusiness, John Wiley & Sons, Ltd., vol. 39(1), pages 196-213, January.
    8. Mehmet Civelek & Aleksandr Kljucnikov & Vendula Fialova & Andrea Folvarcna & Milan Stoch, 2021. "How innovativeness of family-owned SMEs differ depending on their characteristics?," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 413-428, June.
    9. Arsenio T. Bignotia, PhD & Sharon Candy Manguerra-Mahusay, PhD & Jeetendra Vaswani, DBA, 2022. "Entrepreneurial Experiences of BS Entrepreneurship Graduates Batches 2015-2020 of St. Paul University Manila in the New Environment," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(7), pages 350-361, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Riaqa Mubeen & Dongping Han & Jaffar Abbas & Iftikhar Hussain, 2020. "The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    2. Liwen Wang & Jin Jason Lu & Kevin Zhou, 2023. "Technological Capability Strength/Asymmetry and Supply Chain Process Innovation: The Contingent Roles of Institutional Environments in China," Post-Print hal-03954124, HAL.
    3. Dong Wang & Daojun Sun & Xiaofeng Yu & Yihao Zhang, 2014. "The Impact of CEO Duality and Ownership on the Relationship Between Organisational Slack and Firm Performance in China," Systems Research and Behavioral Science, Wiley Blackwell, vol. 31(1), pages 94-101, January.
    4. Katarzyna Bratnicka & Monika Kulikowska-Pawlak, 2016. "Towards an Integrated Framework for Corporate Entrepreneurship (W kierunku zintegrowanej struktury nosnej przedsiebiorczego przedsiebiorstwa)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(62), pages 24-35.
    5. Syeda Humayra Abedin & Humaira Haque & Tanjina Shahjahan & Md Nurul Kabir, 2022. "Institutional Ownership and Firm Performance: Evidence from an Emerging Economy," JRFM, MDPI, vol. 15(12), pages 1-17, November.
    6. Mirza Waseem Abbas* & Dr. Masood ul Hassan, 2018. "The Moderation Effect of External Environment Turbulence in Tourism Sector: Comparative Analysis of Pakistan & Thailand," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 672-684:2.
    7. Chege, Samwel Macharia & Wang, Daoping, 2020. "The influence of technology innovation on SME performance through environmental sustainability practices in Kenya," Technology in Society, Elsevier, vol. 60(C).
    8. Bo Yu & Shengbin Hao & David Ahlstrom & Steven Si & Dapeng Liang, 2014. "Entrepreneurial firms’ network competence, technological capability, and new product development performance," Asia Pacific Journal of Management, Springer, vol. 31(3), pages 687-704, September.
    9. Melek Akın Ateş & Robert Suurmond & Davide Luzzini & Daniel Krause, 2022. "Order from chaos: A meta‐analysis of supply chain complexity and firm performance," Journal of Supply Chain Management, Institute for Supply Management, vol. 58(1), pages 3-30, January.
    10. Mohammad Iranmanesh & Kavigtha Mohan Kumar & Behzad Foroughi & Reza Kian Mavi & Ng Hui Min, 2021. "The impacts of organizational structure on operational performance through innovation capability: innovative culture as moderator," Review of Managerial Science, Springer, vol. 15(7), pages 1885-1911, October.
    11. Dejin Su & Qixia Du & Dongwon Sohn & Libo Xu, 2017. "Can High-Tech Ventures Benefit from Government Guanxi and Business Guanxi ? The Moderating Effects of Environmental Turbulence," Sustainability, MDPI, vol. 9(1), pages 1-17, January.
    12. Chege, Samwel Macharia & Wang, Daoping & Suntu, Shaldon Leparan & Bishoge, Obadia Kyetuza, 2019. "Influence of technology transfer on performance and sustainability of standard gauge railway in developing countries," Technology in Society, Elsevier, vol. 56(C), pages 79-92.
    13. Zhongfeng Su & Jie Chen & Hai Guo & Donghan Wang, 2022. "Top management team’s participative decision-making, heterogeneity, and management innovation: an information processing perspective," Asia Pacific Journal of Management, Springer, vol. 39(1), pages 149-171, March.
    14. Wenhong Zhang & Yapu Zhao & Donghan Wang & Haifeng Wang & Jian Li, 2019. "Ambidextrous search and product innovation: moderating effects of resource and structural attributes," The Journal of Technology Transfer, Springer, vol. 44(4), pages 1007-1028, August.
    15. Ayaz Ahmad & Salniza Md. Salleh & Selvan a/l Perumal, 2018. "Information Technology, Marketing Database and the Process of Integrated Marketing Communications (IMC): A Resource-Capability Nexus," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 6(4), pages :544-560, December.
    16. Aboobucker Ilmudeen, 2022. "Leveraging IT-enabled dynamic capabilities to shape business process agility and firm innovative capability: moderating role of turbulent environment," Review of Managerial Science, Springer, vol. 16(8), pages 2341-2379, November.
    17. Wang, Liwen & Jin, Jason Lu & Zhou, Kevin Zheng, 2023. "Technological capability strength/asymmetry and supply chain process innovation: The contingent roles of institutional environments," Research Policy, Elsevier, vol. 52(4).
    18. Jiawen Chen & Linlin Liu, 2018. "Profiting from Green Innovation: The Moderating Effect of Competitive Strategy," Sustainability, MDPI, vol. 11(1), pages 1-23, December.
    19. Stelios Eliakis & Dimosthenis Kotsopoulos & Angeliki Karagiannaki & Katerina Pramatari, 2020. "Survival and Growth in Innovative Technology Entrepreneurship: A Mixed-Methods Investigation," Administrative Sciences, MDPI, vol. 10(3), pages 1-36, July.
    20. Ilona Baumane & Rebekka Vedina, 2011. "Capacities and Competencies as Sources of Competitive Advantage: The Case Study of Latvian Hotels," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(2), pages 301-318, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:12:y:2020:i:4:p:1355-:d:319821. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.