Relationship between Innovation and the Performance of Small and Medium-Sized Businesses in the Industrial Sector: The Mediating Role of CSR

Abstract

This paper analyses the effect of innovation on the performance of Small and Medium Enterprises (SMEs) and how Corporate Social Responsibility (CSR) mediates this relationship. In order to evaluate our assumptions, a partial least squares structural equation model (PLS-SEM) was applied to a sample of 769 Spanish SMEs through a telephone survey conducted with company managers. The findings show that innovation and CSR have an impact on performance. Additionally, to these strong direct effects, CSR has a side effect that strengthens the beneficial effects of innovation on performance. Finally, the results demonstrate significant implications for both SME managers and owners, as they help them to develop innovation-related strategies, which will lead to higher organizational performance.