Innovation capability as a survival strategy for MSMEs during the economic recovery from the COVID-19 pandemic

Abstract

This study aims to analyze the effect of organizational learning on organizational performance and innovation ability’s moderating variables on the effect of organizational learning on organizational performance. A quantitative approach is used that focuses on hypothesis testing and measurable data and produces generalizable conclusions. The analysis technique used is structural equation modeling (SEM). The contribution of this research is unique because it gives a more specific balanced score card design for micro, small and medium enterprise (MSME) performance to capture dimensions not revealed in existing studies. The results of this study show that organizational learning (exploitation, exploration and ambidexterity) has a positive effect on innovation capability, and vice versa. The theoretical implication of this research is that it offers a broad perspective on how MSMEs function in a pandemic and the tactics they use to overcome adversity and become resilient. Organizational learning and innovation are the two variable components in this study and are utilized as the main drivers of small and medium-sized enterprise (SME) performance. This research has implications for entrepreneurs, as SMEs can apply the findings to enhance their business performance.