An Empirical Examination of the Impact of Initial Capital, Prior Experience, and R&D on SMEs’ Survival and Economic Performance: Moderating Role of Innovation Culture

Abstract

SMEs’ survival and performance continue to be a central concern for strategy experts. Numerous factors affect the SMEs’ survival for new entrants in the industry. This study incorporates research on the survival and performance of new entrant SMEs in a relationship with initial capital investment, experience, R&D, and innovation culture. We examined the influence of the SMEs’ initial investment, experience, R&D, and innovation culture on their survival and performance guided by the evolutionary model of entry and exit to conclude whether these are positively related to each other. Further, we investigated moderated role of innovation culture between initial capital, experience, R&D, and firm performance. The outcomes of this study established on a large size sample of 337 SMEs suggest that firms with a large initial investment, prior experience, and R&D have higher probabilities of survival and economic performance, and innovation culture strengthens the relationship between predictor and outcome constructs.