Abstract

Although the importance of fostering organizational creativity and open innovation is becoming more widely acknowledged, there are still few empirical evidence on the impact of creativity and innovation on enhancing SMEs performance. Moreover, previous study argued that the effect of creativity and innovation is still inconclusive, especially in SMEs. SMEs sometimes perceive that research and development is a costly activity and it doesn’t view as the activity that can directly improve performance. This study aims to examine the effect of organizational creativity and open innovation on SMEs performance. Data used in this study was collected from 206 SMEs located in several regions of Indonesia. The collected data then being analysed using PLS-SEM and this study found that all the hypotheses constructed were accepted. The findings indicate that organizational creativity and open innovation are significantly and positively influence SMEs performance. On the other hand, this study also treats organizational creativity as a second order variable that is formed from a combination of individual creativity, group creativity, internal environment, and knowledge creation where most study only consider individual and group creativity as aspect that formed organizational creativity. The result of this study provide evidence that organizational creativity that is formed by those four aspects has the ability to directly improve SME performance. Theoretically, this study contribute to the debate on how organizational creativity and open innovation can directly improve SMEs performance. Practically, this study provides insight to SMEs manager regarding how organizational creativity and open innovation can contribute to SMEs performance.

Introduction

Every organization will try to obtain optimal performance to achieve organizational goals while being superior to its competitors (Pap et al., 2022). However. the performance of an organization is determined by its ability to innovate both in producing a product or service (Rumanti et al., 2021). Organizational performance is a concept that includes all activities within an organization or company, both those that produce products and services. Organizational performance refers to the implementation of the organization’s vision, mission, goals, and activities (Pap et al., 2022) which are supported by the concept of innovation, one of which is open innovation (Lopes et al., 2022). Innovation is one of the drivers in the organization in an effort to accelerate optimal organizational performance while at the same time reflecting the main goals of the organization (Rumanti et al., 2021). Organizational performance is a key construct in management research and has received a lot of attention from interested parties in an organization (Scaliza et al., 2022, Rumanti et al., 2022, Singh et al., 2021). Organizational performance is also supported by the existence of an innovation related to the creation of new services and products, especially innovation that is open, namely open innovation. Organizational performance can be influenced by the organization’s ability to innovate, especially from external parties (open innovation) (Rumanti et al., 2022).

Conclusion

۶٫۱٫ Main result
This study was able to identify organizational performance through organizational creativity and open innovation. Each plays a role in achieving more optimal organizational performance and supporting organizational goals. Through the research model produced in this study, the relationship and influence of organizational creativity and open innovation will be identified on organizational performance as well as the analysis and implications of both implications for relevant theory or science as well as implications for managerial activities within the organization. The magnitude of the influence of organizational creativity and open innovation on organizational performance will become a reference in evaluating organizational creativity and open innovation processes that will support the performance of Indonesian SMEs. Where construction is studied in the context of SMEs, a sample of 206 SMEs is obtained using a purposive sampling technique. The results of this study provide empirical evidence showing a positive effect of organizational creativity and open innovation on organizational performance. Organizations that prioritize and actively cultivate a creative and innovative culture will likely see increased overall performance. These two main variables have been proven to improve the performance of an organization to reach optimal points in a more challenging business environment. This can be achieved through various means, such as encouraging employee participation in the innovation process, enhancing the individual creativity of employees, and promoting a learning-oriented culture.