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Effects of the Fit between Size and Environmental Uncertainty on Manufacturing SMEs’ Innovation Activity

Abstract The importance of external environmental uncertainty and the size of the organization has long been a topic of much debate, but the findings remain mixed. In addition, few studies have investigated the effects of the fit between factors on an organizational innovation activity. The present study aims to examine the effects of the fit between SMEs’ size and environmental uncertainty on their innovation activity. Building on literature of organizational innovation and environments, a research model is developed and tested with 232 samples. Results indicate that only firm size affects SMEs’ innovation activity and the fit between firm size and environmental uncertainty has a positive effect on the innovation activity. The findings imply that SMEs should place particular emphasis on practices that can strengthen the fit between size and environmental turbulence so as to facilitate their innovation activity. Limitations and suggestions for future studies are presented.