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Strategic perspectives, creativity, and financial performance in Vietnamese SMEs
Phuong Ngoc-Duy Nguyen1,2, Khuong Ngoc Mai1,3, Thu-Hang Le1,3
1Vietnam National University, Ho Chi Minh City, Viet Nam.
Heliyon
|October 9, 2023
Summary
Vietnamese small and medium enterprises (SMEs) benefit from an outside-in strategic perspective, which boosts organizational creativity and financial performance. An inside-out view enhances creativity but may hinder financial success.
Area of Science:
- Strategic Management
- Organizational Behavior
- Business Administration
Background:
- The cognitive school of strategic management explores how managers' perspectives influence firm outcomes.
- Understanding the dual nature of strategic perspectives (inside-out vs. outside-in) is crucial for small and medium enterprises (SMEs).
- Existing research often overlooks the mediating role of organizational creativity in linking strategic perspectives to financial performance within the SME context.
Purpose of the Study:
- To investigate the distinct and combined effects of inside-out and outside-in strategic perspectives on organizational creativity and financial performance in Vietnamese SMEs.
- To examine the mediating role of organizational creativity in the relationship between strategic perspectives and financial performance.
- To provide empirical evidence supporting strategic management theories within the Vietnamese SME sector.
Main Methods:
- Cross-sectional data were collected from 382 managers across various levels in Vietnamese SMEs.
- Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to analyze the proposed relationships.
- The study utilized established scales to measure inside-out perspective, outside-in perspective, organizational creativity, and financial performance.
Main Results:
- The inside-out perspective positively influenced organizational creativity but negatively impacted financial performance.
- The outside-in perspective demonstrated a positive effect on both organizational creativity and financial performance.
- Organizational creativity was found to positively affect financial performance and mediate the relationship between both strategic perspectives and financial performance.
Conclusions:
- SMEs should prioritize an outside-in strategic orientation to simultaneously enhance organizational creativity and financial outcomes.
- While an inside-out focus can foster creativity, it requires careful management to avoid negative financial consequences.
- Organizational creativity serves as a critical mechanism through which strategic perspectives translate into tangible financial benefits for SMEs.
