The Effect of Innovation Orientation on the Performance of SMEs: Focusing on the Role of Business Model Innovation and Environmental Turbulence

This study investigates how innovation orientation and business model innovation(BMI) affect the performance of SMEs. Data were collected from SMEs in the U.S. retail industry. The main findings are as follows. First, product/service innovation(PSI), process innovation(PRI), and resource innovation (RSI) fully mediate the effect of innovation orientation on firm performance. Second, PRI and RSI have positive effects on financial performance, whereas PSI and RSI have positive effects on non-financial performance. Third, RSI has significant positive impacts on both financial and non-financial performance. Fourth, in the relationship between each BMI factor and firm performance, the moderating effect of environmental variables was limited. In highly turbulent environments, only PRI has a greater impact on financial performance. Implications for research and practice are discussed.