Firm strategy and product innovation in SMEs: The mediating role of business networks

Main Article Content

Carlos Melendez-Campos
Ronald Mora-Esquivel
Juan C. Leiva


Product innovation is essential for the growth and profitability of SMEs. Existing scientific evidence suggests that firm strategy and participation in business networks could influence this innovation. In turn, participation in networks might influence the configuration and allocation of the organizational resources and capabilities that help
shape firm strategy. Hence, this study analyzes business networks as a mediator variable between firm strategy and product innovation in SMEs. It uses a sample of 205 SMEs from Costa Rica compiled by the Global Competitiveness Project. The proposed mediation is tested using OLS regression equations. The findings show that business networks do indeed play a mediating role in the relationship between firm strategy and product innovation, which has implications for SMEs in terms of the relevance of participating in such networks and also for public policymakers regarding the importance of managing them.


Download data is not yet available.






Metrics Loading ...

Article Details

How to Cite
MELENDEZ-CAMPOS, C.; MORA-ESQUIVEL, R.; LEIVA, J. C. Firm strategy and product innovation in SMEs: The mediating role of business networks. RAE - Revista de Administracao de Empresas , [S. l.], v. 64, n. 1, p. e2022–0386, 2023. DOI: 10.1590/S0034-759020240104. Disponível em: Acesso em: 21 feb. 2024.


Acemoglu, D., & Cao, D. (2015). Innovation by entrants and incumbents. Journal of Economic Theory, 157, 255-294.

Acock, A. (2013). Discovering Structural Equation Modeling Using Stata. Stata Press.

Adams, P., Bodas-Freitas, I. M., & Fontana, R. (2019). Strategic orientation, innovation performance and the moderating influence of marketing management. Journal of Business Research, 97, 129-140.

Alonso, S., & Leiva, J. C. (2019). Competitividad empresarial en Costa Rica: Un enfoque multidimensional. Tec Empresarial, 13(3), 28-41.

Amabile, T. M., & Pratt, M. G. (2016). The dynamic componential model of creativity and innovation in organizations: Making progress, making meaning. Research in Organizational Behavior, 36, 157-183.

Ansoff, I. (1965). Corporate strategy. McGraw-Hill.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120.

Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6),1173-1182.

Barzi, F., Cortelezzi, F., Marseguerra, G., & Zoia, M. G. (2015). Cooperative innovation: In quest of effective partners – Evidence from Italian firms. Innovation, 17(3), 281-307.

Belso-Martínez, J. A., Mas-Verdu, F., & Chinchilla-Mira, L. (2020) How do interorganizational networks and firm group structures matter for innovation in clusters: Different networks, different results. Journal of Small Business Management, 58(1), 73-105.

Berends, H., Jelinek, M., Reymen, I., & Stultiëns, R. (2014). Product innovation processes in small firms: Combining entrepreneurial effectuation and managerial causation. Journal of Product Innovation Management, 31(3), 616-635.

Castillo-Vergara, M., & García-Pérez-de-Lema, D. (2021). Product innovation and performance in SME’s: The role of the creative process and risk taking. Innovation, 23(4), 470-488.

Chaston, I., & Mangles, T. (2000). Business networks: assisting knowledge management and competence acquisition within UK manufacturing firms. Journal of Small Business and Enterprise Development, 7(2),160-170.

Crema, M., Verbano, C., & Venturini, K. (2014). Linking strategy with open innovation and performance in SMEs. Measuring Business Excellence, 18(2), 14-27.

Creswell, J. W. (2014). Research design: Qualitative, quantitative and mixed methods approaches (4th ed.). SAGE Publications, Inc.

Crowson, M. (2021, March 6). Using 'sem' commands to mimic Hayes' Process Model 4 in Stata [Video]. YouTube.

Day, G., (1990). Market-driven strategy: Processes for creating value. Free Press.

Dobni, C. B. (2010). Achieving synergy between strategy and innovation: The key to value creation. International Journal of Business Science and Applied Management, 5(1),48-58.

Ferreras-Méndez, J. L., Olmos-Peñuela, J., Salas-Vallina, A., & Alegre, J. (2021). Entrepreneurial orientation and new product development performance in SMEs: The mediating role of business model innovation. Technovation, 108, 102325.

Field, A. (2013). Discovering Statistics using IBM SPSS Statistics (4th ed). SAGE Publications.

Fisher, G. J., & Qualls, W. J. (2018). A framework of interfirm open innovation: Relationship and knowledge based perspectives. Journal of Business & Industrial Marketing, 33(2), 240-250.

Galaso, P., Rodríguez-Miranda, A., & Picasso, S. (2019). Inter-firm collaborations to make or to buy innovation: Evidence from the rubber and plastics cluster in Uruguay. Management Research, 17(4), 404-425.

Galvin, P., Burton, N., Singh, P. J., Sarpong, D., Bach, N., & Teo, S. (2020). Network rivalry, competition and innovation. Technological Forecasting and Social Change, 161, 120253.

Genc, E., Dayan, M., & Genc, O. F. (2019). The impact of SME internationalization on innovation: The mediating role of market and entrepreneurial orientation. Industrial Marketing Management, 82, 253-264.

Grant, R. M. (1991). The resource-based theory of competitive advantage: implications for strategy formulation. California Management Review, 33(3), 114-135.

Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360-1380.

Helfat, C. E., Kaul, A., Ketchen, D. J., Barney, J. B., Chatain, O., & Singh, H. (2023). Renewing the resource-based view: New contexts, new concepts, and new methods. Strategic Management Journal, 44(6), 1357-1390.

Henry, L. (2013). Intellectual capital in a recession: Evidence from UK SMEs. Journal of Intellectual Capital, 14(1), 84-101.

Jardon, C., & Martos, M. (2012). Intellectual capital as competitive advantage in emerging clusters in Latin America. Journal of Intellectual Capital, 13(4), 462-481.

Jiang, W., Mavondo, F., & Zhao, W. (2020). The impact of business networks on dynamic capabilities and product innovation: The moderating role of strategic orientation. Asia Pacific Journal of Management, 37, 1239-1266.

Johannisson, B. (1998). Personal networks in emerging knowledge-based firms: Spatial and functional patterns. Entrepreneurship & Regional Development, 10(4), 297-312.

Jordão, R. V. D., Novas, J., & Gupta, V. (2019). The role of knowledge-based networks in the intellectual capital and organizational performance of small and medium-sized enterprises. Kybernetes, 49(1), 116-140.

Ju, M., Jin, J. L., & Zhou, K. Z. (2018). How can international ventures utilize marketing capability in emerging markets? its contingent effect on new product development. Journal of International Marketing, 26(4), 1-17.

Lafuente, E., Leiva, J. C., Moreno-Gómez, J., & Szerb, L. (2019). A non-parametric analysis of competitiveness efficiency: The relevance of firm size and the configuration of competitive pillars. BRQ Business Research Quarterly, 23(3), 203-216 S2340943618301245.

Lafuente, E., & Vaillant, Y. (2021). Pulling from the front or pushing from behind: How competency prioritisation should differ to optimise firm competitiveness. European Business Review, 33(6), 849-868.

Lan, Y., Massimino, B. J., Gray, J. V., & Chandrasekaran, A. (2020). The effects of product development network positions on product performance and confidentiality performance. Journal of Operations Management, 66(7-8), 866-894.

Lechner, C., & Dowling, M. (2003). Firm networks: External relationships as sources for the growth and competitiveness of entrepreneurial firms. Entrepreneurship & Regional Development, 15(1), 1-26.

Liu, C., & Kong, D. (2021). Business strategy and sustainable development: Evidence from China. Business Strategy and the Environment, 30(1), 657-670. 10.1002/bse.2645

Liu, W., & Atuahene-Gima, K. (2018). Enhancing product innovation performance in a dysfunctional competitive environment: The roles of competitive strategies and market-based assets. Industrial Marketing Management, 73, 7-20.

Liu, X., Cai, J., & Smart, A. U. (2020). Does the way in which a firm interacts with its network partners influence its formulation of product innovation strategies? International Journal of Technology Management, 83(4), 181-204.

López-Fernández, J. M., Somohano-Rodríguez, F. M., & Martínez-García, F. J. (2018). Effect of the innovation on the profitability of micro and SMEs in economic contexts of economic recession and growth. Tec Empresarial, 12(1), 7-18.

Lukovszki, L., Rideg, A., & Sipos, N. (2020). Resource-based view of innovation activity in SMEs: An empirical analysis based on the global competitiveness project. Competitiveness Review: An International Business Journal, 31(3), 513-541.

Lumpkin, G.T., & Dess, GG (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172.

March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71-87.

Miller, A., Dess, G. G., & Dess, G. G. (1996). Strategic management (2nd ed.). McGraw-Hill.

Mintzberg, H., & Waters, J. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257-272.

Molina-Morales, F. X., & Martínez-Fernández, M. T. (2010). Social networks: Effects of social capital on firm innovation. Journal of Small Business Management, 48(2), 258-279.

Moreno-Moya, M., & Munuera-Aleman, J.-L. (2016). The differential effect of development speed and launching speed on new product performance: An analysis in SMEs. Journal of Small Business Management, 54(2), 750-770.

Morgan, T., Anokhin, S., Kretinin, A., & Frishammar, J. (2015). The dark side of the entrepreneurial orientation and market orientation interplay: A new product development perspective. International Small Business Journal, 33(7), 731-751.

Mu, J., Peng, G., & MacLachlan, D. L. (2009). Effect of risk management strategy on NPD performance. Technovation, 29(3), 170-180.

Organisation for Economic Co-operation and Development. (2021). OECD SME and entrepreneurship Outlook 2021. OECD Publishing.

Plano, V. L., & Creswell, J. W. (2015). Understanding research: A consumer’s guide (2nd ed.). Pearson Education, Inc.

Porter, M. E. (1980). Firm strategy. The Free Press.

Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.

Prahalad, C. K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68, 79-91.

Ratner, B. (2009). The correlation coefficient: Its values range between +1/−1, or do they? Journal of Targeting, Measurement and Analysis for Marketing, 17(2), 139-142.

Rideg, A., Szerb, L., & Varga, A. R. (2023). The role of intellectual capital on innovation: Evidence from Hungarian SMEs. Tec Empresarial, 17(2), 1-19.

Shan, P., Song, M., & Ju, X. (2016). Entrepreneurial orientation and performance: Is innovation speed a missing link? Journal of Business Research, 69(2), 683-690.

Surroca, J., Tribó, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: The role of intangible resources – Intangibles, corporate responsibility, and financial performance. Strategic Management Journal, 31(5), 463-490.

Tarapuez, E., Guzmán, B. E., & Hernández, R. P. (2016). Estrategia e innovación en las Mipymes colombianas ganadoras del premio Innova 2010-2013. Estudios Gerenciales, 32(139), 170-180.

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.<509::AID-SMJ882>3.0.CO;2-Z

Thatchenkery, S., & Katila, R. (2021). Seeing what others miss: A competition network lens on product innovation. Organization Science, 32(5), 1346-1370.

Thoumrungroje, A., & Racela, O. C. (2022). Innovation and performance implications of customer-orientation across different business strategy types. Journal of Open Innovation: Technology, Market, and Complexity, 8(4), 178.

Turner, K. L., & Makhija, M. V. (2012). The role of individuals in the information processing perspective. Strategic Management Journal, 33(6), 661-680.

Udagedara, R. S., & Allman, K. (2019). Organizational dynamics and adoption of innovations: A study within the context of software firms in Sri Lanka. Journal of Small Business Management, 57(2), 450-475.

Vasconcelos, R. B. B. de, & Oliveira, M. R. G. de. (2018). Determinants of innovation in micro and small enterprises: A management approach. RAE-Revista de Administração de Empresas (Journal of Business Management), 58(4), 349-364.

Vittinghoff, E., Glidden, D. V., Shiboski, S. C., & McCulloch, C. E. (2011). Regression methods in biostatistics: Linear, logistic, survival, and repeated measures models (2nd ed.). Springer.

Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.

Wright, P. L., Kroll, M. J., & Parnell, J. A. (1998). Strategic management: Concepts (4th ed). Prentice Hall.

Yahya, S., Khan, A., Farooq, M., & Irfan, M. (2022). Integrating green business strategies and green competencies to enhance green innovation: Evidence from manufacturing firms of Pakistan. Environmental Science and Pollution Research, 29(26), 39500-39514.