Impact of intangible resources (dominant logic) on SMEs innovation performance, the mediating role of dynamic managerial capabilities: evidence from China

Abstract

PurposeThe purpose of this paper is to examine the important role of intangible resources under resource based view (RBV) such as dominant logic (information filter and learning/routines) and dynamic managerial capabilities (managerial human capital, HC; social capital, SC and managerial cognition, MC) in small and medium sized enterprises (SMEs) innovation performance in Hefei, Anhui province China.Design/methodology/approachAn empirical study was conducted while distributing 498 questionnaires among different SMEs in Hefei, of which around 429 responses were received. Structural equation modeling (SEM) was employed to test the proposed hypotheses.FindingsThis research study is an endeavor to fill the missing link in the existing literature, and empirical analysis of this research supports all the hypotheses confirming that dominant logic and dynamic managerial capabilities are valuable intangible resources and positively and significantly influence the SMEs innovation performance. Results also indicate that managerial human capital, social capital and managerial cognition (dynamic managerial capabilities) play a significant mediating role between dominant logic and SMEs innovation performance.Research limitations/implicationsThe findings suggest that those SMEs which are lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance.Practical implicationsThe findings suggest that SMEs lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance.Originality/valueThis paper argues theoretically (under RBV and dynamic capabilities view-DCV) and demonstrates empirically that in an emerging economy, i.e. China characterized by highly volatile, dynamic and uncertain competitive environments, SMEs lack tangible resources; therefore, intangible resources (e.g. dominant logic-DL and dynamic managerial capabilities-DMC) are vital for SMEs innovation performance and competitive advantage.

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“…To be successful in the SME market it is necessary to invest well in managerial skills. Therefore, in a very volatile and uncertain environment, SMEs utilize the resources of a business unit, such as the dominant logic tends to be more innovative and gain a competitive advantage (Khan et al, 2020).…”

“…The most important point of the framework developed in this study is to determine whether capabilities are more or less strongly related to performance constructs. Based on research conducted by Khan et al, (2020) it shows that the dominant logic (information filters and learning orientation) provides a solid basis for increasing performance innovation in SMEs. To be successful in the SME market it is necessary to invest well in managerial skills.…”

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“…However, these resources cannot be gained without an entrepreneurial posture (Jiang, Liu, Fey, & Jiang, 2018). Therefore, firms need entrepreneurial‐oriented managers and employees to acquire valuable resources (tangible and intangible) that cannot be directly or indirectly obtained by competitors and rivals firms (Khan, Anwar, Li, & Khattak, 2021; Khan, Atlas, Ghani, Akhtar, & Khan, 2020).…”

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“…Digital capabilities, as represented by DMC, have a relationship to innovation. In empirical research conducted by Khan et al (2020), found that there was a significant positive relationship between DMCs and the innovation performance of MSMEs. In addition, DMCs are also a mediator in the relationship between dominant logic (information filtering and learning routines) on innovation performance.…”