The top managers of SMEs can derive the disruptive innovation through knowledge process capabilities and creativity of subordinates

Abstract

Globalization trends have been increasing all over the world and firms are overly emphasizing advanced technologies in the business world for gaining competitive advantages. While disruptive innovation is also a trigger for these firms to adapt and capture lower-end markets. This is a big challenge for the top managers of organizations to derive disruptive innovation by encouraging their subordinates for utilizing the knowledge process capabilities and creating novel ideas. The purpose of this study was to examine the relationship of knowledge process capabilities with disruptive innovation of the manufacturer and service sector small and medium enterprises. Data was collected from 194 senior managers of manufacturer and service sector SMEs in Pakistan (N = 194) and valid scales were used for measuring all constructs of this study model. SPSS and AMOS programs were used for analyzing the CFA of the measurement model and SEM of the study model. The study results indicated significant and positive relationships between knowledge process capabilities and subordinate creativity and disruptive innovation. Furthermore, subordinate creativity was completely mediated in the relationship between knowledge process capabilities and disruptive innovation. This study contributed to the literature on knowledge management and innovations. This is a cross-sectional study and can guide SMEs to adopt disruptive innovation for capturing low-end markets where lower-stream customers are demanding cheap products/services. Through practicing this study model, practitioners, researchers, and CEOs of SMEs can foster disruptive innovation.