The moderating effect of government support in the relationship between open innovation and firm's innovation performance of small and medium enterprises in Malaysia furniture manufacturing sector

Abstract

Open innovation is a viable source to leverage economic viability and success of firms amidst contemporarily global, highly competitive, and transformative postindustrial society. To date, most open innovation research focused exclusively on large companies, while neglecting the specific competitive challenges and strategies of small and medium-sized enterprises (SMEs), in particular of developing countries. This study aimed to fill this gap by investigating open innovation landscape of furniture manufacturing SMEs (FMSMEs) due to their significant roles in Malaysia’s economic development. Based on open innovation model and resource-based view theory, this study investigated the influence of open innovation activities and government support in determining firms’ innovative performances. Data were collected based on random sampling surveys of 880 FMSMEs in Johor Bahru, Malaysia. Data analysis of useable 210 questionnaires were done using hierarchical multiple regression analyses. Results revealed a statistical significance of open innovation activities in determining FMSMEs firms’ innovative performances. Moreover, it is found that government support is a strong moderator of firms’ innovative performances. Findings derived from this study contributed to better understanding of the open innovation activities and practices of FMSMEs in Malaysia. Finally, this study suggests more future research to explore open innovation, innovative performance and government support in the service sector as well as in industries of different nature.