Innovation and firm performance: Evidence from malaysian SMEs


  • Daljeet Singh Gill Acuity Business Solutions, Malaysia
  • Norshafizah Hanafi Universiti Utara Malaysia, Malaysia


Product innovation, process innovation, mortality, SMEs performance, Malaysia


The study is designed to examine and analyze the effects of product innovation and process innovation on firm performance of Small Medium Enterprises (SMEs) within the service industry in Malaysia. The populations of the respondents are owner managers of 150 SME firms, constituting 18% response rate. To test the relationship of the variables, Partial Least Squares Structural Equation Modeling (PLS-SEM) is utilized. Results of the analysis indicate that, product and process innovation positively impact as much as, 43% on overall firm’s performance. SME firms’ that emphasizes product and process innovation are proven to improve the performance. The study highlights that innovation is important aspect in all entrepreneurial activities that further ensure improved firm performance.


Kajian ini direka untuk mengkaji dan menganalisis kesan inovasi produk dan proses inovasi terhadap prestasi firma Perusahaan Kecil Sederhana (PKS)  dalam industri perkhidmatan di Malaysia. Populasi responden adalah pengurus pemilik 150 firma PKS, yang membentuk kadar tindak balas 18%. Untuk menguji hubungan pemboleh ubah, Pemodelan Persamaan Struktur Secara Separa Separa (PLS-SEM) digunakan. Hasil analisa menunjukkan bahawa, inovasi produk dan proses mempunyai kesan positif sebanyak 43% terhadap prestasi keseluruhan firma. Syarikat PKS yang menekankan inovasi produk dan proses terbukti dapat meningkatkan prestasi. Kajian ini menekankan bahawa inovasi adalah aspek penting dalam semua aktiviti keusahawanan yang seterusnya memastikan peningkatan prestasi syarikat.

Kata kunci: innovasi produk, innovasi proses, penutupan syarikat, prestasi firm PKS, Malaysia.


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How to Cite

Gill, D. S., & Hanafi, N. (2020). Innovation and firm performance: Evidence from malaysian SMEs. Management Research Journal, 9(1), 51–59. Retrieved from