Communication and information resources and product innovation in SMEs: the sequential role of co-creation and process innovation

Purpose This study aims to investigate how Communication and Information Resources (CIR) drive product innovation in small and medium-sized enterprises (SMEs) by uncovering the sequential mechanisms through which co-creation and technological capabilities jointly operate. Addressing persistent gaps in SME innovation research – particularly in emerging economies – the authors clarify how digital resources translate into innovation outcomes. Design/methodology/approach Drawing on the resource-based view, service-dominant logic and absorptive capacity theory, the authors test a sequential double mediation model using structural equation modeling (SEM) adapted for categorical indicators, estimating the main model with WLSMV and complementing indirect-effect inference with Bayesian SEM to obtain credible intervals. Model fit was assessed through WLSMV-scaled indices and posterior predictive checks. The analysis draws on survey data from 124 Costa Rican SMEs. Findings Contrary to traditional assumptions, CI Resources do not directly increase product innovation. Instead, their value materializes through a chained pathway: CIR → co-creation → process innovation → product innovation. Both mediating links and the full sequential mechanism are statistically supported. The results also reveal a suppression effect in which the direct relationship becomes nonsignificant once mediators are included, confirming that innovation outcomes arise primarily from capability-building processes rather than from digital resources alone. Research limitations/implications This study relies on categorical indicators, a modest sample and data from a single emerging economy, limiting generalizability and causal inference. Future research should replicate the model with larger data sets, use longitudinal designs and test cross-country invariance to strengthen external validity. Practical implications Managers should complement digital tool adoption with deliberate investments in co-creation practices and capability development, as these mechanisms are essential to convert digital engagement into meaningful innovation outcomes. Originality/value This study offers a novel theoretical contribution by empirically validating a sequential capability-building trajectory that integrates service-dominant logic and absorptive capacity theory. It is among the first to demonstrate, within an emerging-economy SME context, that the innovation payoff of CI Resources occurs only when collaborative routines and process innovation capabilities are jointly activated. This advances current understandings of digital transformation and innovation in resource-constrained settings.