Is Organizational Agility a Missing Link between the Innovation Capabilities-Firm Performance Relationship? Evidence from Manufacturing SMEs in Malaysia

In a dynamic business environment, innovation capabilities (IC) are crucial as it enables SMEs to swiftly respond to evolving customer demands, maintaining agility and thereby gaining a competitive edge.This study, framed from the perspective of dynamic capabilities, examines the relationships between IC, organizational agility (OA), and firm performance (FP).Using data from 313 manufacturing SMEs in Malaysia and applying PLS-SEM, the proposed model was tested.The results support the hypotheses, confirming the positive effect of IC on FP, IC on OA, and OA on FP.Moreover, the mediating role of OA in the IC-FP relationship has been also found.