ENHANCING SME PERFORMANCE IN MALAYSIA: THE CRUCIAL ROLE OF INNOVATION

Abstract

Small and Medium Enterprises (SMEs) are a vital sector of Malaysia’s economy, contributing significantly to job creation and economic growth. SMEs can effectively leverage innovation to achieve sustainable development in volatile business environments.This study aims to investigate the impact of innovation on SME performance in Malaysia. Employing a quantitative approach, data were gathered through convenience sampling, 368responsesusable for analysis. Smart PLS 4 was employed to conduct partial least squares structural equation modeling (PLS-SEM), comprising evaluation of measurement and structural model. The findings of the study are that innovation has a positive and significant impact on SME performance. This study provides an essential contribution to developing the existing literature on the impact of innovation (INV) on the performance of SMEs. This study provides a better understanding of the roles that innovation (INV) plays in enhancing performance in companies in Malaysia, limitation and direction for previous studies has been provided.