Innovative behavior and venture performance of SMEs The moderating effect of environmental dynamism

Purpose - The purpose of this paper is to explore the relationship between innovative behavior and firm performance to determine empirically whether managers' innovative behavior impacts directly or indirectly on firm performance through innovative output. A proposed conceptual model is tested with the moderating effects of environmental dynamism. Design/methodology/approach - An empirical study tests the conceptual model of a multi-industry sample of Tunisian small and medium-sized enterprises. For this analysis the author applies the partial least squares (PLS) technique using the software package SmartPLS, version 2.0. Findings - Empirical findings reveal that innovative behavior acts on innovation output thus having a positive and significant effect on business performance. Direct effect on business performance is found to be positive but weakly significant. These positive relationships tend to decrease when market conditions are highly dynamic. Practical implications - Managers should be aware of the strategic potential of their innovative skills which can reinforce a firm's innovativeness in order to improve business performance. Originality/value - This paper proposes a model showing how a manager's innovative behavior affects innovation output thus enhancing firm performance. The proposed conceptual model gives a more specific vision with the introduction of environmental dynamism as a moderating factor.