Innovation at the nexus of strategy, culture, and SME performance: An emerging country perspective

Although small and medium-sized enterprises (SMEs) are key drivers of economic growth in developing countries like Bangladesh, their contributions remain suboptimal. This study examines the roles of entrepreneurial orientation, market orientation, and organizational culture on SME performance, with innovation as a mediator. A resource-based view framework guided the investigation. Data were collected via a survey of 305 SME employees and analyzed using SmartPLS 4. Results indicate that market orientation significantly enhances innovation but does not directly affect firm performance. Innovation negatively influences performance and mediates the relationship between market orientation and performance. Entrepreneurial orientation shows a marginal positive effect on innovation but not on performance, whereas organizational culture has no significant impact. Findings highlight the critical role of market orientation in fostering innovation while indicating potential short-term performance challenges from innovation activities. The study provides a refined theoretical framework and practical insights for SME managers and policy makers.