"Innovation as a mediator between Innovative Culture, Transformational Leadership, Knowledge Management, Learning Orientation, and Performance "

Abstract

INTRODUCTION Hina Zafar1 Khawaja Khalid Mehmood2 1 & 2Institute of Management Sciences, Bahauddin Zakariya University Multan. (khawjakhalid@bzu.edu.pk) An organization’s performance is its ability to attain its goals efficiently and effectively, and if it does so, it could become successful in achieving long term competitive advantage (Ricardo & Wade, 2001). Tidd (2001) argues that companies could better exploit market opportunities by adopting innovation. Other scholars have majorly concluded that amongst others, innovation has been an important contributory factor for organizations performance in multiple contexts (Gault, 2018; Mehmood, Sonia, & Umar, 2016; Rajapathirana & Hui, 2018). For instance, Zahra, Belardino, and Boxx (1988), Damanpour and Evan (1984) have found a 149 January-June 2019 JISR-MSSE Number 1 Volume 17 10.31384/jisrmsse/2019.17.1.9 JEL Classification: M1, M14, M59 positive effect of innovation on organization performance in various industries including service-based and administrative organizations. In a more recent study conducted in the context of transitional economy in South-Eastern Europe, Turulja and Bajgoric (2019) suggested that product innovation and process innovation, both positively affected performance of the various type of firms. Innovation could be determined by certain important strategic factors. For instance, learning orientation is supposed to be concerned with getting a high level of organizational performance through the use of new knowledge for developing new offerings (Hurley & Hult, 1998). Further, organization culture contains the ability to foster innovation and performance (Hartmann, 2006). Empirical researches have also suggested the positive nature of the association between culture, innovation and company performance (Gallagher, 2008; Miron, Erez, & Naveh, 2004). Similarly, knowledge management is critical in fostering innovation and enhancing performance (Gloet & Terziovski, 2004; Parlby & Taylor, 2000). Also, transformational leadership is supposed to motivate human resources for getting innovative products and achieving better performance (Elkins & Keller, 2003; Seaver, 2010). Importantly, several scholars have suggested that variables like learning, transformational leadership, knowledge management, and innovation have been significant for stimulating SMEs’ growth and development (Bessant & Tidd, 2007; Hogen & Coote, 2013; Nunes, Annansingh, & Eaglestone, 2006; Tajasom, Hung, Nikbin, & Hyun, 2015). 150 January-June 2019 JISR-MSSE Number 1 Volume 17 Problem statement & research significance Hence, in this area, the critical literature review indicates that although innovation has been studied in the past by numerous scholars but its antecedents and performance consequences are still knotty questions. Especially, innovation's intervening nature of effect between innovative culture, knowledge management, transformational leadership, learning orientation and performance of SMEs has not been studied earlier in one research design which is a significant research gap. Specifically, the information about how and to what extent SMEs need to focus on building an innovative culture, fostering learning, encouraging transformation leadership, and facilitating knowledge management processes for addressing innovation and boosting performance is lacking. Furthermore, this kind of investigation for Pakistani SMEs working in diverse sectors is also deficient which further signifies the research gap and the need for this study as it highlights the absence of significant information in this regard. The study takes into account the SME sector of Pakistan because it is quite significant in terms of its contribution to the country's growth and development. The findings of this study are supposed to contribute to resource-based theory, the theory of the growth of firms, dynamic capabilities perspective, and transformational leadership theory; as well as the findings, guide SMEs about how they could be more innovative and competitive in the world place.