Bridging imagination and strategy in SMEs: The role of ideas and strategy in SME performance

Background: Ideas have become the new battleground for small and medium enterprises’ (SME) success. In the digital age, competition is no longer focussed on information but on how they can compete to generate inventive ideas. Aim: This study investigates the impact of founders’ imaginativeness on SME performance. The mediating influence of strategic flexibility, moderating SME resources and intra-organisational knowledge sharing determines the relationship between imaginativeness and SME performance. Setting: The evolving landscape of competition in the digital age, where the ability to generate innovative ideas has become paramount for SMEs. Recognising the significance of founders’ imaginativeness in driving business performance, the study seeks to delve deeper into this relationship. Methods: The study employed a quantitative approach to investigate the relationship between founder imaginativeness and SME performance, utilizing data from 98 Indonesian SMEs. Results: The findings indicate that founder imaginativeness is one of the important points in SME performance. Furthermore, strategic flexibility mediates the impact of imaginativeness on SME performance, whereas intra-organisational knowledge sharing and resources moderate the impact of imaginativeness on SME performance. Conclusion: The findings offer practical insights for SMEs navigating the digital age, highlighting the importance of fostering founder imaginativeness. enhancement strategies. Using a psychoanalysis lens and a combination of several theories, this study emphasises the significance of fostering a culture conducive to imaginative thinking and knowledge sharing within SMEs. Contribution: By cultivating a culture that values creativity, collaboration, and continuous learning, SMEs can create an environment that fosters innovation and long-term success, driving organisational performance and growth.