Enhancing SMEs firm performance through innovation capability

The aim of this research is to examine the relationship between innovation capacity (IC), and firm performance (FP) among SMEs within the state of Selangor, Malaysia. A total of 150 firms responded for the research study. This research utilized the Partial Least Squares Structural Equation Modeling (PLS-SEM) to establish validity and reliability of measurement model and test the relationships. The results indicated a significant and positive relationship between innovation capability and performance of firms. Owner-managers of SMEs must lay emphasis on innovativeness to ensure enhanced firm performance and growth.