Impact of intangible resources (dominant logic) on SMEs innovation performance, the mediating role of dynamic managerial capabilities: evidence from China

Purpose The purpose of this paper is to examine the important role of intangible resources under resource based view (RBV) such as dominant logic (information filter and learning/routines) and dynamic managerial capabilities (managerial human capital, HC; social capital, SC and managerial cognition, MC) in small and medium sized enterprises (SMEs) innovation performance in Hefei, Anhui province China. Design/methodology/approach An empirical study was conducted while distributing 498 questionnaires among different SMEs in Hefei, of which around 429 responses were received. Structural equation modeling (SEM) was employed to test the proposed hypotheses. Findings This research study is an endeavor to fill the missing link in the existing literature, and empirical analysis of this research supports all the hypotheses confirming that dominant logic and dynamic managerial capabilities are valuable intangible resources and positively and significantly influence the SMEs innovation performance. Results also indicate that managerial human capital, social capital and managerial cognition (dynamic managerial capabilities) play a significant mediating role between dominant logic and SMEs innovation performance. Research limitations/implications The findings suggest that those SMEs which are lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance. Practical implications The findings suggest that SMEs lacking tangible resources should build and nurture their top management capabilities and dominant logic and SMEs effectively utilizing these intangible resources can enhance their innovation performance. Originality/value This paper argues theoretically (under RBV and dynamic capabilities view-DCV) and demonstrates empirically that in an emerging economy, i.e. China characterized by highly volatile, dynamic and uncertain competitive environments, SMEs lack tangible resources; therefore, intangible resources (e.g. dominant logic-DL and dynamic managerial capabilities-DMC) are vital for SMEs innovation performance and competitive advantage.