The Moderating Role of An Innovative Culture in The Relationship Between Absorptive Capacity and Innovative Performance Among

Abstract

The struggle to successfully survive the global and economic situation in Jordan for Small and Medium-sized Enterprises (SMEs) is due to limited resources. In a very competitive environment, innovative performance is necessary for SMEs to maintain their competitive advantage. Innovative performance results from leveraging the opportunities for creativity, building of values via resources and capabilities and the combination of effective internal and external knowledge structures. In Jordan, however, the Innovative Performance (IP) of manufacturing SMEs has not been adequately explored. Thus, the impact of absorptive capacity on the Innovative Performance (IP) of manufacturing SMEs in Jordan was investigated in this study, with a focus on the two major dimensions of Absorptive Capacity (AC), which are Potential Absorptive Capacity (PAC) and Realised Absorptive Capacity (RAC). The moderating role of Innovative Culture (IC) and the effect of both absorptive capacity dimensions on innovative performance were also examined. Data was obtained using a structured questionnaire involving owners and managers of SMEs in Jordan. Using the “drop and collect” method, 450 questionnaires were distributed and a 72% response rate was achieved for a total of 324 usable questionnaires. The study found that the firms’ PAC had a significant effect on the RAC. Furthermore, both PAC and RAC demonstrated a significant positive relationship with the SME’s innovative performance. Additionally, the relationship between RAC and IP was positive and significant, where it was moderated by IC, but not by PAC. Essentially, this study adds knowledge and offers insight pertaining to the impact of AC dimensions on innovative performance, as well as the moderating role of IC within the context of SMEs. Several theoretical and practical implications and suggestions for future research were discussed as well.