Exploring the Relationship Between Innovation Capability, Total Quality Management and SMEs Performance in Electric Fan Industry of Pakistan: Moderating Effect of Relational Learning

Abstract

Purpose – The main objective of this paper is to simultaneously determine the moderating role of relational learning in the relationship between Innovation Capability, Total Quality Management and SMEs Performance. This study attempts to expand the insights by determining these relationships in the context of a rapidly liberalizing and developing economy; Pakistan. By conducting this research with Pakistani data, the authors can assess whether the relationship between these three strategic resources shows systematic differences to those in developed economies.

Design/methodology/approach – The authors of this study utilized the data collected through survey method in Electric Fan Industry of Pakistan. Well established scales were adopted from past research in order to measure the constructs used in the study. Structural equation modeling technique was used to test the hypotheses of the study. 239 fan manufacturing firms have been included in the sample. The authors used Smart PLS version 3 for data analysis.

Findings – The findings revealed that relational learning moderates the relationship between predictor and criterion variables. Contrary to the previous findings, no significant relationship between Innovation Capability and SME Performance was found to exist; however, there existed a positively significant relationship between total quality management and SME performance.

Research limitations/implications – Owing to the cross-sectional time frame that the study follows, it does not infer any causality. Having been limited to only fan manufacturing industry, the study calls for further research in different industry/country perspectives.

Practical implications – The study highlights policy building prospects for Pakistani government based on the principles of innovation capability and quality enhancement through collaborating with business networks and exploring the potential of relational learning to help improve overall SMEs performance.

Originality/value – This study contributes to the growing body of literature on SMEs-level innovation, TQM and relational learning in developing economies like Pakistan.