Effect of intellectual capital and entrepreneurial orientation on innovation performance of manufacturing SMEs: mediating role of knowledge sharing

Purpose: Manufacturing sectors are identified to be of the foremost importance expected to increase Malaysia's GDP contribution to the Eleventh Malaysia Plan (11th MP). The present study aims to examine the effects of intellectual capital and entrepreneurial orientation (EO) on knowledge sharing in manufacturing SMEs. The impact of intellectual capital and EO on firms' innovation performance in small and medium-sized enterprises (SMEs) is accordingly investigated by considering knowledge sharing as the mediator. Design/methodology/approach: The data were collected via a questionnaire consisting of the owners or top managers of 121 manufacturing SMEs in Malaysia. Partial least square (PLS) was used to analyze the obtained data. Findings: Results indicated that human capital, as well as external relational capital, has a positive correlation with both knowledge sharing and innovation performance mediated by knowledge sharing. It was also shown that knowledge sharing has a significant impact on firm innovation performance. Interestingly, structural capital, internal relational capital and (EO) did not significantly impact knowledge sharing and innovation performance. However, all of these elements are important to influence the firm's innovation performance. Practical implications: The study contributes to the literature on intellectual capital, entrepreneurial orientation, knowledge sharing and innovation through developing and testing the possible connections among them. The finding of this study will provide owners and top managers in manufacturing SMEs insight into the variables improving firm innovation performance. Originality/value: This study provides a basis for researchers to reach more mounting evidence about the practice of knowledge sharing and innovation performance among manufacturing SMEs in Malaysia.