The Effects of Organizational Innovation on Operational Performance and Other Types of Innovation

The objective of this study is to examine the interrelationship between four types of innovation capabilities, mainly organizational, product, process and marketing innovation capability and to assess the impact of these innovations capability types on the operational performance of manufacturing SMEs. A survey method was used to collect data involving 124 Indonesian manufacturing SMEs. Structural equation modeling and relevant statistical methods were then used for analysis. It is found that organizational innovation capability is positively associated with product, process, and marketing innovation capabilities. These four types of innovation capability simultaneously are also related to the operational performance. In addition, it is found that organizational innovation capability is indirectly correlated with the improvement in operational performance.