Business strategy, innovation and organisational performance of Malaysian food manufacturing SMEs: Dynamic capabilities as a moderator

Malaysian food manufacturing small and medium enterprises (SMEs) are yet to reach their full potential. Food manufacturing SMEs must focus on the variables that will increase their performance. As a result, the purpose of this research was to look into the possible variables that could better explain the performance of SMEs by investigating the link between cost-leadership strategy, differentiation strategy, product innovation and process innovation, and the organisational performance of SMEs in Malaysia‘s food manufacturing industry. Furthermore, the study intended to examine the moderating role of dynamic capabilities in the relationship between the organisational performance of food manufacturing SMEs and cost-leadership strategy, differentiation strategy, product innovation and process innovation. This study employed the resource-based view (RBV) and the dynamic capabilities theory as the underpinning theories. Based on a cross-sectional study design, data were collected from 141 food manufacturing SMEs in Malaysia using self-administered questionnaires. This study utilised the Partial Least Square Structural Equation Modelling (PLS-SEM) to establish the validity and reliability of the measurement model and to test the study‘s hypotheses. The findings showed that the cost-leadership strategy, differentiation strategy, product innovation and process innovation had significant relationships with organisational performance. Besides, the results also revealed that dynamic capabilities moderated the relationship between organisational performance and differentiation strategy and process innovation. This study provides important insights to owners-managers, policy-makers, and researchers to assist SMEs in the new paradigm of business operations. Additionally, the study also offers theoretical, practical and methodological implications for academics and professionals. Lastly, limitations and suggestions for future studies are highlighted.