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Aligning Malaysian SMEs with the Megatrends: The Roles of HPWPs and Employee Creativity in Enhancing Malaysian SME Performance

Leveraging the findings of the extant body of literature, small and medium enterprises (SMEs) in Malaysia, like any other country of the world, are central to economic development, industrial development, job creation and poverty reduction. Nevertheless, given the megatrends, which represent huge transformative global forces with far-reaching effect on individuals, society, culture, business and economies, and the need for enhancement of Malaysian SMEs to facilitate the achievement of Malaysian SME master plan (2012–2020), Malaysian SMEs are left with no option other than aligning their policies and strategies with the megatrends, which demands that SMEs should provide ‘added-value’ services, and products, or high-quality and innovative products and services. SMEs could achieve this through the strategic development of the firm’s rare, inimitable and non-substitutable human resource. To offer empirical insights on this issue, this study investigated the mediating role of employee creativity in the high-performance work practices (HPWPs)–performance nexus. Via the cross-sectional research approach, data were collected from a sample of 287 managers of Malaysian SMEs in Kedah, Penang and Perak states of Malaysia. The partial least squares algorithm and the bootstrapping technique were used for data analysis. The overall findings signify the mediating effect of employee creativity on job design–performance nexus, indicating that job design, which facilitates workers’ autonomy to utilize their capabilities, would enable and stimulate the workers to adapt their approaches to meet the unique needs of the customers and the transformative global forces, because digital transformation has changed SMEs’ operations and delivery models. Also, HPWPs that focus on development of creative problem-solving skill can enhance workers’ ability to generate alternative solutions, product knowledge and customer service skills which are crucial to creativity in the organization. Finally, the implications, limitations and suggestions for future research are discussed.