Creativity, Innovation and Performance of SMEs

Numerous studies are related to, but specifically, the impact of creativity and innovation on performance has not been measured empirically. On the other hand, if there were studies related to the impact and relation to innovation and creativity on performance, they were qualitative studies, and if they were quantitative, they were not related to innovation and creativity.

Therefore, the study has measured the impact of innovation and creativity on the performance of SMEs. The study has also analyzed how entrepreneurs can increase innovation in a company to increase its performance.


The article aims to determine the association of firm performance with creativity and innovation. Also, the study has analyzed the impact of creativity and innovation on the performance of the SMEs. The study has also included the following specific aims.

  • The understanding of innovation and creativity
  • Importance of innovation and creativity for SMEs
  • Identification of the practices used to bring creativity and innovation in SMEs.


The following are the article’s objectives that have been set according to the problem statement of the study and the whole study was focused on the following research objectives.

  • To observe the impact of innovation and creativity on the performance of the SMEs
  • To see the way entrepreneurship affects the SMEs
  • To observe the factors that can contribute to enhancing the value of the organizations through innovation.
  • The following are the questions that have been answered by the study. In other words, the following are the core research questions that have been addressed by the study.
  • What is the impact of Innovation and Creativity on SME?
  • How can entrepreneurship affect the SME?
  • What is the relation between entrepreneurship, innovation, creativity, and SMEs performance?


Definition of Variables

There are three core variables of the study including creativity, innovation, and firm performance. Also, the basic definition of the previously mentioned variables is as follows while the performance of the company has been measured in terms of SMEs’ performance.



Creativity is the name or idea of adding or putting a certain value in product or service that can enhance the customer experience or can give an exciting look to the product or service. In addition, creativity is the result of imagination and thinking differently. Because creativity is the name of making things different from their traditions. However, creativity can be done by just doing something different for an existing product or service.



The process of updating products, services or systems is known as innovation. Also, it means that when a company continuously improves its offering and services to delight its customers more professionally by adding value in goods and services, it is known as innovation. Furthermore, innovation could increase the market reputation of the company and can lead it to better results, but it is also risky because innovation may fail sometimes.



Performance refers to the results of a company. Moreover, performance has different dimensions and can be measured in different aspects because the performance of the company can either be measured by strategic or financial prospects. Moreover, financial prospects include growth, profitability and market value of the company; on the other hand, strategic performance includes long term market growth, market reputation, and other strategic aspects. Finally, overall performance can be measured by using financial and strategic aspects by keeping them together and comparing the firm’s performance along with its benchmarks. In this study overall performance of SMEs has to be measured.


A literature review of this study consist of two different parts including theoretical review and empirical review. Also, the literature review showed the current knowledge and work of scholars done on innovation, creativity and SMEs’ performance. Moreover, in the literature review, the work that was done regarding the variables above by other scholars have been summarized, and several research papers were reviewed to find the academic significance of the topic. Furthermore, in the theoretical review section, all theories and frameworks regarding innovation, creativity, and firm performance. On the other hand, in the empirical review section, empirical studies have been summarized to conclude the findings of empirical studies related to the topic.

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