UNDERSTANDING THE IMPACT OF ENTREPRENEURIAL ORIENTATION ON INNOVATION PERFORMANCE OF SMES: EVIDENCE FROM MALAYSIA

Small and medium-sized enterprises (SMEs) play a crucial role in the economic development of countries by providing opportunities for individuals to enhance their skills and knowledge. These businesses are agile and can quickly adapt to changes in supply and demand. As a result, SMEs that demonstrate higher levels of innovation are better equipped to adapt to evolving environments and develop new skills that improve their performance. Research consistently highlights that Entrepreneurial Orientation (EO) is essential for driving innovation within SMEs. This study aimed to investigate the relationship between EO (innovativeness, risk-taking and proactiveness) on SMEs innovation performance (IP). Using a cross-sectional design, the research gathered quantitative data from 128 randomly selected SMEs in the manufacturing, services, and construction sectors in Peninsular Malaysia. The results showed that the EO dimensions of risk-taking, innovativeness, and proactiveness have a positive effect on IP. Based on these findings, it is recommended that Malaysian SMEs focus on the identified EO aspects to enhance their entrepreneurial culture and innovation capabilities. This research contributes to the existing literature by demonstrating how Malaysian SMEs can increase their prospects of success. The findings are anticipated to have implications for both academic and practitioner communities in developing strategies to enhance innovation levels in SMEs.