¹Ismail Alhaji Suleiman, PhD,  ²Hamza Aliyu Galadanchi, PhD,  & ³Bello Taofik Abidemi, PhD

Department of Business Administration, Al-Qalam University Katsina.

Correspondence Email Address: [email protected]

ABSTRACT

This study investigates the impact of innovative capabilities on the performance of manufacturing Small and Medium-sized Enterprises (SMEs) in Kano State, Nigeria, drawing on the Resource-Based View (RBV) theory. The research examined seven dimensions of innovative capability: participatory leadership culture, work climate and well-being, ideation and organizing structure, know-how development, exploiting external knowledge, regeneration, and individual activity. Data were collected from a population of 594 manufacturing SMEs, with a final sample of 439 respondents. The data were analyzed using the Statistical Package for Social Sciences (SPSS) version 24 for preliminary analysis, and the hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings revealed that Individual Activity and Know-how Development significantly and positively impacted SME performance. Conversely, Exploiting External Knowledge, Ideation and Organizing Structure, and Regeneration did not show a significant relationship with performance. The study concludes that for manufacturing SMEs in this context, internal capabilities related to human capital and knowledge development are more critical for performance than external knowledge acquisition or certain structural innovation processes. The implications suggest that SME owners and policymakers should prioritize strategies that enhance employee engagement, skill development, and participatory leadership to improve firm performance.

Keywords: Innovative Capability, Manufacturing Sector, SMEs Performance.