The Influence of Government Support on Innovation Performance among Manufacturing SMEs in Malaysia

Abstract

Government support plays an important role in fostering innovation performance and the growth of small and medium enterprises (SMEs).Being considered as the backbone of Malaysian economy, the development of this sector is important as Malaysia will transform into a high income nation. Realizing the importance of SMEs toward the economic growth, Malaysian government provided various incentives and support programs worth in billions of ringgit for improving the performance of SMEs in Malaysia. Therefore, it is importance to examine the effectiveness of those support programs toward SMEs since it is waste of resource if no outcome emerges from those investment and efforts. However, most of the literature from previous study in Malaysia has mentioned on the linkage between government support and SMEs performance but very few has focuses on innovation performance. In the attempts to fill this gap, this research aims to investigate the influence of government support and entrepreneurial bricolage on innovation performance. The concept of bricolage offers a new approach to understand innovation in resource scarce environment as most of SMEs faced major challenges from such environment. In addition, this study also aims to investigate the extent of interaction from the government support on the relationship between entrepreneurial bricolage and innovation performance. The study has adopted a quantitative research approach where 217 sets of data has been collected from Federation of Malaysian Manufactures (FMM) Directory for year 2016. The response rate of the survey is at 43.4%. The reliability and validity of measurement model has been established through PLS-SEM and both predictors variable (government support and entrepreneurial bricolage) have a positive significant effect on innovation performance. However, the interaction of government support on the relationship between entrepreneurial bricolage and innovation performance is not significant. Nevertheless, this study has provided the empirical evidence and also contribute to the body of existing literature of academic research. Hopefully that this paper can contribute to the existing literature and fills the gap of research.