Innovativeness, Environment and Performance of Small and Medium-sized Enterprises (SMEs) in the Manufacturing Sector in Malaysia

Abstract

This study examines innovativeness and environmental factors that can influence the performance of small and medium-sized enterprises (SMEs) in the Malaysian manufacturing sector. Previous research have focused mainly on technological innovation rather than innovativeness in administration process and innovation culture. The present study examines the fundamental nature of innovativeness and relates these various elements of innovativeness to SMEs performance. The present study includes the role of the government. Firstly, in the Malaysian context, the government interferes in the market through new business policies, increasing or decreasing the interest rate, controlling money supply and implementing competition policy law. Secondly, the role of government has been neglected in most previous research in measuring the environment influences on business in spite of their importance in determining the environment indicators, such as, environmental uncertainty and intensity of competition. The present study shows that the innovativeness and environmental factors have significant impact on SMEs performance.