MODERATING ROLE OF COMMERCIAL CAPABILITIES ON FIRM PERFORMANCE THROUGH INNOVATIVE CAPABILITY IN MANUFACTURING MSMES

Abstract

Purpose: Manufacturing MSMEs are in need to identify new ideas and work on ideas to implement them into their process to create new or improved products. Innovation management is a prerequisite and has a direct effect on a firm's performance. Innovation allows firms to secure a market position and create value by making new customers. This study attempts to find the relationship between innovative capabilities and the firm's performance in manufacturing MSMEs and how the commercial capabilities of the firm moderate the relationship. Theoretical Framework: Several studies have been reviewed to identify the relationship between innovation, firm performance, and commercial capabilities. A necessitated gap in the literature was identified and the factors were established. Design/Methodology/approach: This study was done among the manufacturing MSMEs in India. A structured questionnaire was circulated to the top performing MSMEs in every state of India and the responses were collected through email. A total of 384 responses were collected at the end of the data collection period. The scale of the measure was adopted and it has measured reliability and validity scores to get to be used in this study. Findings: The results of the study showed that the innovative capability of manufacturing MSMEs has a significant positive relationship with the firm's performance. The moderation analysis showed that the manufacturing capability and marketing capability significantly moderate the relationship between innovative capability and a firm's performance. Research, Practical & Social Implications: This study provides the managers of the manufacturing MSMEs to rely on investment in innovation however they are moderately influenced by networking, R&D, and commercial capabilities of the business. Originality/Value: Contributes to the existing body of knowledge theoretically and empirically by including diverse demographic respondents the results obtained were unique and universally applicable.