The Impact of Environmental Turbulence on the Perceived Importance of Innovation and Innovativeness in SMEs

Abstract

This study investigates how market turbulence, technological turbulence, and competitive intensity affect the perceived importance of innovation and innovativeness, and thus SMEs’ business performance. Structural equation modeling is conducted on a sample of 373 SMEs. Our findings show that both market and technological turbulence increase the perceived importance of innovation, but only market turbulence impacts SMEs’ innovativeness directly. The perceived importance of innovation mediates environmental turbulence’s influence on a firm’s innovativeness. Competitive intensity has no significant effect on the perceived importance of innovation and innovativeness. Finally, innovativeness enhances business performance when using both perceptual and lagged objective performance data.

Additional information

Notes on contributors

Mateja Bodlaj

Mateja Bodlaj is assistant professor at the Academic Unit for Marketing, Faculty of Economics, University of Ljubljana.

Barbara Čater

Barbara Čater is associate professor at the Academic Unit for Marketing, Faculty of Economics, University of Ljubljana.