Abstract:
It is a widely accepted fact among researchers, policymakers, and entrepreneurs that Small
and Medium Enterprises (SMEs) are playing a significant role in the country's economic
upheaval. Therefore, this study attempts to assess the impact of innovation on SMEs to
determine their financial and non-financial performance. The data for this study has been
obtained by administering a structured questionnaire among 150 SMEs in the Southern
province of Sri Lanka. Correlation and Regression analysis were the primary analytical tools
used to analyze the research findings via the SPSS 24 version. Findings revealed that product
innovation, process innovation, and market innovation are the innovation dimensions that
contribute to SMEs' performance in the Southern province. Product innovation contributes
more significantly to SMEs' financial and non-financial performance, followed by process
innovation and market innovation. The study thus concluded that the effects of product,
marketing, and organizational innovations are statistically significant among the SMEs.
