Multidimensional Innovation and Organizational Performance: Empirical Evidence from Artisanal MSMEs in Oaxaca, Mexico

Innovation constitutes a strategic capability that enables micro, small, and medium-sized enterprises (MSMEs) to adapt to changing environments. However, its relationship with organizational performance remains insufficiently explored among artisanal enterprises, where competitiveness requirements coexist with the preservation of traditional knowledge and cultural identity. This study examines the relationship between innovation and organizational performance in 337 artisanal MSMEs across ten communities in the Central Valleys of Oaxaca, Mexico, selected through non-probability quota sampling with proportional allocation. Innovation was examined across four dimensions (product, process, marketing, and organizational innovation), while organizational performance was assessed across five dimensions (productivity, sales, profitability, customers, and growth). The final instrument comprised 48 items distributed across nine dimensions and exhibited an adequate factorial structure, with satisfactory levels of reliability and discriminant validity. The analyses revealed a positive relationship between innovation and organizational performance, although its strength and pattern varied across the different dimensions. Organizational innovation exhibited the most consistent pattern, particularly in relation to productivity, sales, and profitability. Process innovation showed a stronger association with customer-related outcomes, whereas product and marketing innovations displayed more specific associations with particular components of organizational performance. Multiple regression models and sensitivity analyses further supported these patterns. In conclusion, the findings demonstrate that different forms of innovation relate differently to the performance of artisanal MSMEs, highlighting the need to examine this relationship from a multidimensional and context-specific perspective.