ENHANCING ORGANIZATIONAL PERFORMANCE OF MALAYSIAN SMEs THROUGH HUMAN RESOURCE MANAGEMENT (HRM) PRACTICES AND ORGANIZATIONAL INNOVATIVE CAPABILITY: Organizational Innovative Capability

In a general sense, organizational innovation is normally described as “the adoption of a new idea or behavior by an organization”. It refers to the process of generating, developing, and implementing ideas or behaviors that were new to the organization at the time of adoption. This definition is broad enough to encompass a variety of innovations related to all aspects throughout the organization, including a device, system, process, policy, procedure, program, product, or service. Thus, the innovation consists of new ideas or behavior development or implementation, whereby the innovation can be new products or services, new process technologies in manufacturing, a new structure or administrative system, or a new plan or program to connect organizational members. It is a process of changing an organization, whether it is in an internal or external environment, and aspires to contribute to the positive performance of the adopting organization. Moreover, the adoption of innovations in an organization can be a predictor of the performance of the organization, including SMEs, although sometimes the SMEs cannot be actively involved in the innovations due to the lack of expertise and financial problems.
In fact, innovation is a broad field of studies, and the phenomenon of innovation in organizations certainly has different interpretations within the different threads of the literature. Despite there being discrepancies between the concepts of innovation, innovativeness, the capacity to innovate, and innovative capability, overlapping of these concepts might exist. For example, Hurt, Joseph, and Cook conceptualized firm innovativeness from two viewpoints; first, as a behavioral variable, i.e., the rate of a firm’s innovation adoption, and second, as an organization’s willingness to change. Hurley and Hult introduced two constructs of innovation, which are innovativenesss as meaning “openness to new ideas as an aspect of a firm’s culture” and the capacity to innovate as “the ability of the organization to adopt or implement new ideas, processes, or products successfully”. This is in line with Tajeddini, Trueman, and Larsen, who incorporate the approach of Hurley and Hult and observed that innovativeness was “the willingness and ability to adopt, imitate, or implement new technologies, processes and ideas, and commercialize them in order to offer new, unique products and services before most competitors”.
Further, Avlonitis, Kouremenos, and Tzokas referred to organizational innovativeness as representing the latent capability to develop and implement new ideas, which consist of two crucial areas of technology and behavior. Wang and Ahmad defined organizational innovativeness as ” an organization’s overall innovative capability of introducing new products to the market, or opening up new markets, through combining strategic orientation with innovative behavior and processes.” Similarly, Nasution and Mavondo posited that innovativeness as an organizational capability was in “generating new ideas, and their incorporation into new products, processes, and administrative procedures in order to deliver superior customer value relative to competitors”. Here