Diffusion of innovation among Malaysian manufacturing SMEs

The purpose of this paper is to examine the attributes of innovation adoption and its effects on the performance of Malaysian manufacturing SMEs.

Quantitative data were collected from 360 randomly selected manufacturing SMEs through structured interviews.

The findings of the study confirmed that, in Malaysian manufacturing SMEs, the degree of persuasion (i.e. relative advantages, compatibility, complexity, trialability and observability), strategic orientation (i.e. consumer, market and entrepreneurship) and firm antecedents (i.e. prior condition, knowledge and risk orientation) have significant effects on the innovation (i.e. product, process and service) adoption and performance of SMEs.

For policymakers, this study emphasizes the areas to focus on the development of an effective innovation ecosystem for an innovation-led economy. Because SMEs operate with limited resources and capacity, the programs and policies for innovation support systems must focus on providing new innovation information, cost-benefit analyses for new innovation adoption, innovation adoption processes and how new innovations affect performance.

The paper examines an important, but under-researched issue – designed and tested a model under the premises of the DOI and organizational diffusion of innovation theories which improve the knowledge and understanding about the innovation adoption by manufacturing SMEs.