Abstract

Innovation is defined as a natural renewable source accessible to all restricted only by human effort. It is also affirmed that innovation create a positive impact of the organization capability. Based on the current situation in Malaysia, it’s established that SME’s has been undergoing challenges that have reduce their capability, sustainability and growth. These issues have created a negative impact of the SME’s and also in the Malaysia economy. Hence, for SME’s to be strengthen and to overcome their problems, there should be a drastic change or modification to be experienced in Malaysia SME’s which will enhance their capability towards innovation performance growth. As such this study investigates the innovation practices amongst the SMEs, in order to enhance their business growth performance in the Malaysian market. Data from a sample of 413 respondents from SMEs in the construction, service and manufacturing sectors was collected by means of a structured questionnaire. The sampling technique/procedure used was the stratified random sampling in other to analyze the hypothesis model. The result of the findings indicated that there is a positive relationship between organization culture and human capital towards innovation performance growth with organizational culture having the strongest coefficient. The findings as well enlighten small and medium sized firms as well as policy makers that innovation is an essential tool in the present day business doings. In conclusion, further studies should examine how small and medium sized firms can make a choice from a range of possibilities for innovation sources before they carry out the real innovation.

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