Innovation, Strategic Planning, and Technology Adoption as Drivers of SMEs’ Performance
Keywords:
innovation, strategic planning, technology adoption, SMEs performance.
Abstract
Small and Medium Enterprises (SMEs) play a pivotal role in driving economic growth and employment, particularly in emerging economies. However, their performance is often constrained by limited resources, weak strategic alignment, and insufficient technological integration. Grounded in the Resource-Based View (RBV) and Dynamic Capabilities framework, this study examines the influence of innovation, strategic planning, and technology adoption on SMEs’ performance. Data were collected from 100 SME respondents in Indonesia using purposive sampling, and the analysis was conducted through Structural Equation Modeling (SEM) with SmartPLS 3.0. The findings demonstrate that strategic planning significantly enhances SMEs’ performance by improving internal alignment and market responsiveness. Innovation, while essential, shows inconsistent effects, as its benefits depend on managerial capability and resource readiness. Moreover, technology adoption emerges as a critical factor, strengthening the positive impact of strategic planning and mitigating the risks of poorly managed innovation. The results highlight that SMEs must balance innovation efforts with systematic planning while integrating technology to ensure sustainable competitiveness. This study contributes theoretically by advancing the integration of RBV and Dynamic Capabilities in SME performance research, and it provides practical insights for managers and policymakers to foster digital readiness, strategic orientation, and innovation driven growth.
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Srinivasarao, Y., Reddy, N., & Babu, G. (2020). Small and Medium Sized Enterprises Key Performance Indicators. IOSR Journal of Economics and Finance (IOSR-JEF) , 11(4).
Suardana, I. M., Yuliati, N. N., Sari, P. R. K., & Arsana, I. N. (2025). Innovation Drives MSME Performance and Competitiveness in Emerging Economies. American International Journal of Business Management (AIJBM), 8(5).
Sun, W., Chen, K., & Mei, J. (2024). Integrating The Resource Based View and Dynamic Capabilities: A Comprehensive Framework For Sustaining Competitive Advantage in Dynamic Markets . EPRA International Journal of Economic and Business Review (JEBR), 12(9).
Supriadi, I., Maghfiroh, R. U., & Abadi, R. (2023). Transforming MSMEs through Innovation and Technology: Driving Growth and Sustainability in the Digital Age . Atlantis Press.
Teece, D. J. (2023). The Evolution of the Dynamic Capabilities Framework. In R. Adams, D. Grichnik, A. Pundziene, & C. Volkmann (Eds.), Artificiality and Sustainability in Entrepreneurship: Exploring the Unforeseen, and Paving the Way to a Sustainable Future (pp. 113–129). Springer International Publishing. https://doi.org/10.1007/978-3-031-11371-0_6
Triwahyono, B., Rahayu, T., & Kraugusteeliana. (2023). Analysing the Role of Technological Innovation in Improving the Operational Efficiency of MSMEs . Jurnal Monfo Polgan.
Zhou, B., & Zheng, L. (2023). Technology-pushed, market-pulled, or government-driven? The adoption of industry 4.0 technologies in a developing economy. Journal of Manufacturing Technology Management, 34(9), 115–138. https://doi.org/10.1108/JMTM-09-2022-0313
Barney, J. (1991). Firm Resources and Sustained Competitive Advantage . Journal of Management , 17(1).
Chiu, C.-N., & Yang, C.-L. (2019). Competitive advantage and simultaneous mutual influences between information technology adoption and service innovation: Moderating effects of environmental factors. Structural Change and Economic Dynamics, 49, 192–205. https://doi.org/10.1016/j.strueco.2018.09.005
Desalegn, E. G., Guedes, M. J. C., Gomes, J. F. D. S., & Tebeka, S. M. (2024). Disentangling organizational agility from flexibility, adaptability, and versatility: a systematic review. Future Business Journal.
Donkor, J., Donkor, G. N. A., Kankam-Kwarteng, C., & Aidoo, E. (2018). Innovative capability, strategic goals and financial performance of SMEs in Ghana. Asia Pacific Journal of Innovation and Entrepreneurship, 12(2), 238–254. https://doi.org/10.1108/APJIE-10-2017-0033
Fitriati, T. K., Purwana, D., & Buchdadi, A. D. (2020). The Role of Innovation in Improving Small Medium Enterprise (SME) Performance. International Journal of Innovation, Creativity and Change, 11(2).
Fred R.David. (2016). Manajemen Strategik Edisi 15 : Suatu Pendekatan Keunggulan Bersaing Konsep. Salemba Empat.
Gavrila, S., & Ancillo, A. D. L. (2021). Entrepreneurship, innovation, digitization and digital transformation toward a sustainable growth within the pandemic environment. International Journal of Entrepreneurial Behavior & Research, 28(1), 45–66. https://doi.org/10.1108/IJEBR-05-2021-0395
Ghozali, I. (2014). Structural Equation Modeling Metode Alternatif Dengan Partial Least Square (PLS). Universitas Diponegoro.
Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2018). Multivariate Data Analysis. In Pearson Custom Library (Seventh Ed). Pearson Custom Library. https://doi.org/10.4324/9781351269360
Held, P., Heubeck, T., & Meckl, R. (2025). Boosting SMEs’ digital transformation: the role of dynamic capabilities in cultivating digital leadership and digital culture. Review of Managerial Science. https://doi.org/10.1007/s11846-025-00919-5
Hendrawan, S. A., Chatra, A., Iman, N., Hidayatullah, S., & Suprayitno, D. (2024). Digital Transformation in MSMEs: Challenges and Opportunities in Technology Management . Jurnal Informasi Dan Teknologi, 6(2).
Hidayat, A. S., & Pok, W. C. (2025). Empowering SMEs innovation through intangible factors. Journal of Innovation and Entrepreneurship, 14(1), 1. https://doi.org/10.1186/s13731-024-00437-w
Holm, C. G., Kringelum, L., & Anand, A. (2025). Creating effective strategy implementation: a systematic review of managerial and organizational levers. Review of Mangerial Science. https://doi.org/https://doi.org/10.1007/s11846-025-00880-3
Kafidi, T. K., & Kaulihowa, T. (2023). Investigating the Effect of Strategic Planning on the Financial Performance of SMEs in Namibia. Economics and Business Quarterly Reviews, 6(2).
Lestari, N. S., Rosman, D., & Triana, I. (2024). Analyzing the Effect of Innovation and Strategic Planning on MSME Performance, Utilizing Technology Adoption as a Moderator. Procedia Computer Science, 245(C), 500–507. https://doi.org/10.1016/j.procs.2024.10.276
Loo, M. K., Ramachandran, S., & Raja Yusof, R. N. (2023). Unleashing the potential: Enhancing technology adoption and innovation for micro, small and medium-sized enterprises (MSMEs). Cogent Economics & Finance, 11(2), 2267748. https://doi.org/10.1080/23322039.2023.2267748
Lumenalta. (2024). Best practices for seamless adoption of new technology (updated 2025).
Mogrovejo, P., Maldonado-Maldonado, J. M., Crespo-Martínez, E., & Astudillo, C. (2020). Procedure for the implementation of the manufacturing module of an ERP system in MSME. Applied case: Textile “tendencias” enterprise, UDA ERP. Advances in Intelligent Systems and Computing, 1131 AISC, 392–397. https://doi.org/10.1007/978-3-030-39512-4_61
Purnomo, S., Nurmalitasari, & Nurchim. (2024). Digital Transformation of MSMEs In Indonesia : A Systematic Literature Review. Journal of Management and Digital Business, 4(2).
Raharjo, K., Afrianty, T. W., & Prakasa, Y. (2024). Digital literacy and business transformation: social-cognitive learning perspectives in small business enterprises. Cogent Business & Management, 11(1).
Sharma, A., & Venkatraman, S. (2023). Towards a Standard Framework for Organizational Readiness for Technology Adoption. Advances in Digital Manufacturing Systems. Springer.
Song, Y., Qiu, X., & Liu, J. (2025). The Impact of Artificial Intelligence Adoption on Organizational Decision-Making: An Empirical Study Based on the Technology Acceptance Model in Business Management. Systems, 13(8). https://doi.org/https://doi.org/10.3390/systems13080683
Srinivasarao, Y., Reddy, N., & Babu, G. (2020). Small and Medium Sized Enterprises Key Performance Indicators. IOSR Journal of Economics and Finance (IOSR-JEF) , 11(4).
Suardana, I. M., Yuliati, N. N., Sari, P. R. K., & Arsana, I. N. (2025). Innovation Drives MSME Performance and Competitiveness in Emerging Economies. American International Journal of Business Management (AIJBM), 8(5).
Sun, W., Chen, K., & Mei, J. (2024). Integrating The Resource Based View and Dynamic Capabilities: A Comprehensive Framework For Sustaining Competitive Advantage in Dynamic Markets . EPRA International Journal of Economic and Business Review (JEBR), 12(9).
Supriadi, I., Maghfiroh, R. U., & Abadi, R. (2023). Transforming MSMEs through Innovation and Technology: Driving Growth and Sustainability in the Digital Age . Atlantis Press.
Teece, D. J. (2023). The Evolution of the Dynamic Capabilities Framework. In R. Adams, D. Grichnik, A. Pundziene, & C. Volkmann (Eds.), Artificiality and Sustainability in Entrepreneurship: Exploring the Unforeseen, and Paving the Way to a Sustainable Future (pp. 113–129). Springer International Publishing. https://doi.org/10.1007/978-3-031-11371-0_6
Triwahyono, B., Rahayu, T., & Kraugusteeliana. (2023). Analysing the Role of Technological Innovation in Improving the Operational Efficiency of MSMEs . Jurnal Monfo Polgan.
Zhou, B., & Zheng, L. (2023). Technology-pushed, market-pulled, or government-driven? The adoption of industry 4.0 technologies in a developing economy. Journal of Manufacturing Technology Management, 34(9), 115–138. https://doi.org/10.1108/JMTM-09-2022-0313
Published
2025-08-16
How to Cite
Ananda, N. A., Amirul Mustofa, & Eddy Yunus. (2025). Innovation, Strategic Planning, and Technology Adoption as Drivers of SMEs’ Performance. International Journal of Economics, Business and Innovation Research, 4(05), 229-243. https://doi.org/10.63922/ijebir.v4i05.2218
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