Does workforce innovation mediate the relationship between internal factors and performance in Malaysian entrepreneurial SMEs?

Abstract

This paper investigates the relationship between internal factors, workforce innovation and performance on entrepreneurial small and medium sized enterprises in Malaysia. The internal factors are transformational leadership, rewards, autonomy and empowerment and innovative supportive climate. An empirical analysis is based on data for 92 small and medium-sized enterprises (SMEs) in Malaysia. The results indicate that workforce innovation and performance is higher in entrepreneurial SMEs with high degree of transformational leadership, rewards, autonomy, empowerment and innovative supportive climate. Furthermore, the findings of this paper support the view that workforce performance of entrepreneurial SMEs will be better if they improve the relationship between transformational leadership and rewards with workplace innovation.