Influence of innovation and firm competitiveness on business performance: the moderating role of dynamic capabilities in Low-Tech Small and Medium Enterprises

Abstract

Amidst accelerating technological change and intense global competition, innovation and dynamic capabilities have become critical for the survival and growth of Small and Medium Enterprises (SMEs). This is particularly true in South Africa, where manufacturing SMEs are pivotal to job creation and inclusive economic growth yet face severe structural impediments, including infrastructure deficiencies, regulatory inefficiencies, and intense import competition. Despite their importance, low-tech manufacturing SMEs remain disproportionately vulnerable, suffering from high failure rates and stagnant productivity. This study examines the impact of innovation on firm competitiveness and business performance, as well as the moderating role of dynamic capabilities, within a context that is both critically challenged and under-researched. The study adopted a positivist research philosophy, a deductive approach, and a cross-sectional survey design. Data were collected via a structured questionnaire from 304 owners and managers of low-tech manufacturing SMEs across Johannesburg, Ekurhuleni, and Tshwane metropolitan municipalities in Gauteng, South Africa.