The Effect of Innovation on the Company’s Performance in Small and Medium-Sized Businesses with the Mediating Role of Lean: Agile Project Management Office (LAPMO)

Abstract

Small- and medium-sized enterprises (SMEs) require less formalized project management methods than large corporations. However, project management can play a significant role in implementing innovations. Even though lean-agile project management offices (LAPMO) are becoming increasingly important for SMEs, each company’s performance varies significantly due to varying innovative capabilities and the dynamism of internal and external contexts. Based on a literature study, innovative capabilities, and LAPMO, we have developed a theoretical model with 11 assumption models. As a follow-up, we conducted empirical research, including critical variable metrics, data collection and analyses, validity tests, reliability tests, regression analysis, and structural equation modeling. The model developed in this study considers the many roles that innovation capacity and project agility play in enhancing corporate performance. LAPMO mediates the relationship between innovation and performance in small and medium-sized businesses. Organizational innovation, open innovation, and innovation capabilities affect companies’ performance. In small and medium businesses, they also affect LAPMO. For small and medium-sized businesses, LAPMO mediates the relationship between organizational innovation, open innovation, and innovation capabilities.