Integration Capability As A Mediator In The Relationship Between Human Capital, Structural Capital, And Innovation Performance Of Smes
Abstract
Small and medium-sized enterprises (SMEs) are the foundation of many global economies where they contribute significantly to the creation of new jobs. For Malaysia's economy to thrive, it is crucial to increase SME’s competitiveness in the IR 4.0 new markets, which require SMEs to become more competitive by innovating. Dynamic Capabilities Theory (DCT) asserts that SMEs’ competitiveness is influenced by the creation and recreation of resources as well as their capacity to adapt to rapid environmental changes. Therefore, this study investigates the interactions of resources such as Human Capital (HC) and Structural Capital (SC) on the SMEs’ innovation performance (IP). Additionally, this study observed the mediation effect of Integration Capability (IC) on the relationships between HC, SC and IP. A survey methodology was employed, and questionnaires were distributed to selected SMEs. A total of 250 responses were collected and analysed using Structural Equation Modelling-Partial Least Square (SEM-PLS) statistical tools. We found a significant positive relationship between HC and IP, but insignificant relationship between SC and IP. IC mediates the relationship between HC and SC on IP. The findings demonstrate the benefits of fostering innovation while highlighting the importance of IC in the exploitation of HC and SC. The results have a significant impact on SME management and policymakers towards improving competitive advantage of the SMEs. Hence, the study clarifies the role of HC and SC for the integration of capability developments. Furthermore, integrating the Dynamic Capability Theory (DCT) in explaining the relationship between HC, SC, IC, and IP is a preliminary effort to broaden the concept's appeal in new geographical boundaries and empirical contexts, thus making a significant contribution to the SMEs industry and in the strategic management’s literature.
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Publication Date
01 September 2026
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European Publisher
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1st Edition
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1-1
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Accounting and Finance, Business and Management, Communication, Law and Governance
Cite this article as:
Md Ariff*, F. F., Mohd Noor, N. F., & Yacob, N. (2026). Integration Capability As A Mediator In The Relationship Between Human Capital, Structural Capital, And Innovation Performance Of Smes. In Y. Naoyuki, A. Peng Hwa, & J. Matthes (Eds.), GLY-Upcoming Volume: Innovating Together: The Convergence of Management, Communication, and The Digital Transformation, vol -. European Proceedings of Social and Behavioural Sciences (pp. 0-0). European Publisher. https://doi.org/10.15405/epsbs.2026.09.72