The Relationship between Organizational Culture and Product Innovativeness

Abstract

SMEs are a key source of innovation in many developed and developing countries including Malaysia. However, innovation activities among SMEs in Malaysia are still not encouraging. Recent studies indicated a range of structural, external and internal determinants of innovation among SMEs. Among these determinants, organizational culture is claimed to have a more significant influence. However, there are only a few studies examining the relationship between organizational culture and product innovation among SMEs in Malaysia. This study is aimed to bridge the gap by examining the relationship between organizational culture and product innovation among SMEs in the Southern Region of Malaysia. Thirty-six small businesses participated in this research by responding to an established instrument of Denison's Organizational Culture Survey (OCS) and self-developed product innovativeness items. The results showed that three out of four dimensions of organizational culture (Mission, Consistency, Involvement) have significant relationship with product innovativeness. This finding substantiates the importance of establishing competitive organizational culture among SMEs by focusing on these dimensions. Thus, leadership development programmes for entrepreneurs need to incorporate culture building competencies to ensure SMEs sustainability.

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