Relationship of Innovation and Market Orientation With the Profitability of SMEs in Mexico

Abstract

The objective of this research is to analyse the effect of innovation and market orientation of small and medium-sized enterprises (SMEs) on their profitability in 2018 in Mexico, because they are two key elements in the development and growth of these companies, which compete with large companies within a globalized and constantly evolving market. For this analysis, an empitical study was carried out through a survey on a sample 300 companies selected by simple random sampling adapting the scales of Kohli & Jaworski (1990) to measure market orientation, for innovation the scale proposed by the OECD (2005) was adapted and business profitability and adaptation was made to the cale proposed by Gadenne, Mia, Sands, Winata, & Hooi (2012). Reliability and validity of the scales were evaluated through the Confirmatory Factor Analysis, which shows that the higher level of orientation to the SME market, the higher level of business profitability so companies must seek to implement innovation activities in their products, processes and management to see better, results reflected, in addition, the influence exerted by market orientation on innovation activities drives the company to meet the needs of the client and in this way conquering their preference.