Exploring predictors of innovation performance of SMEs: a PLS-SEM approach

In the competitive business world, companies strive to be innovative, and to do so, they try to implement innovative human resource practices. Therefore, the authors propose an association between innovative human resource practice, organizational commitment, innovation performance and transformational leadership.

This study gathered data from 1,037 small- and medium-sized enterprises and implied partial least square structural equation modeling PLS-SEM using Smart PLS was adopted to test the hypotheses.

The findings reveal positive direct relationships between innovative human resource practices, organizational commitment and innovation performance. Moreover, organizational commitment positively mediates and transformational leadership significantly and positively moderates the relationship. Companies should use innovative recruitment and selection, performance management, and innovative compensation to enhance organizational commitment and innovation performance. In addition, the optimized organizational commitment aids in strengthening the connection between innovative human resource practices and firms' innovation performance.

Managers should also develop a sense of affiliation and attachment to increase innovation performance. The study contributes empirically to the literature on innovative human resource practices and their effect on organizational commitment and innovation performance.