The Impact of Innovation on the Performance of SMEs in Southern Province, Sri Lanka

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.