The Antecedents of Business Model Innovation in Malaysian Manufacturing SMES

In the past few years, there has been a growing interest from academics and practitioners in understanding the factors that affect business model innovation (BMI). Nevertheless, there remains a lack of understanding of what drives SMEs to be engaged in BMI. Drawing upon the Strategic Entrepreneurship Theory (SET), the aim of this research is to examine the effect of the external and internal drivers of manufacturing SMEs on BMI. These factors include environmental dynamism, absorptive capacity, and entrepreneurial orientation. The data were collected from 282 manufacturing SME managers in Malaysia using a quantitative survey method. The Partial Least Squares (PLS) modeling technique was utilized to examine the data. The findings revealed that entrepreneurial orientation is positively related to BMI, while environmental dynamism and absorptive capacity have shown adverse results. The findings imply that entrepreneurial orientation is an important factor influencing manufacturing SMEs to be engaged in BMI. Hence, the results suggested that BMI in manufacturing SMEs significantly depends on its entrepreneurial activities which changes its core business processes. This study builds upon existing research by examining the factors that influence BMI in small and medium-sized manufacturing enterprises.