Innovation Culture and Organizational Performance in Small and Medium-Sized Enterprises: A Systematic Review from Emerging Economies

Abstract

Innovation culture has increasingly been recognized as a critical driver of organizational performance in small and medium-sized enterprises (SMEs), particularly in dynamic and resource-constrained environments. This study provides a systematic synthesis of the literature examining the relationship between innovation culture and SME performance, with specific attention to emerging economy contexts. Drawing on one hundred peer-reviewed journal articles sourced primarily from the Scopus database and reputable academic publishers, the review adopts the Oslo Manual’s classification of innovation to distinguish among product, process, marketing, and organizational innovation.

The findings indicate that innovation culture is positively associated with SME performance; however, its impact is largely indirect and occurs through the adoption of specific innovation types. Product, process, and organizational innovations demonstrate strong and consistent positive associations with performance, while the effects of marketing innovation are mixed and highly context-dependent. The review further reveals that leadership commitment, employee empowerment, and supportive institutional environments strengthen the innovation–performance linkage, whereas rigid structures, risk aversion, and limited managerial support constrain innovation outcomes.

By integrating the Resource-Based View and Dynamic Capabilities perspectives, this study advances theoretical understanding of innovation culture as both a strategic intangible resource and an enabler of adaptive capability. The paper contributes to the literature by reconciling mixed empirical findings, differentiating innovation types, and offering a coherent conceptual synthesis to guide future empirical research. Practical insights are also provided for SME managers and policymakers seeking to enhance competitiveness through targeted innovation strategies.

Keywords: Innovation culture, organizational performance, SMEs, emerging economies, systematic review

DOI: 10.7176/EJBM/18-3-03

Publication date: March 28^th 2026