Purpose The purpose of this study is to investigate the mechanisms of how employees’ innovative work behavior (EIWB) can influence small and medium enterprise (SME) performance through the mediation effects of dynamic capabilities (DCs) and entrepreneurial orientation (EO). Design/methodology/approach Online survey data was collected from 319 Vietnamese Information and Communications Technology (ICT) SMEs and analyzed using structural equation modeling (SEM) and asymmetric fuzzy set qualitative comparative analysis (fsQCA) techniques. Findings The SEM results indicate that EIWB does not directly influence firm performance; instead, it improves performance indirectly through the sequential mediation of DCs and EO. FsQCA results corroborate these findings, emphasizing the need to integrate EIWB with the components of DCs and EO for enhanced performance. Furthermore, both SEM and fsQCA reveal that DCs significantly affect performance, whether viewed as an overall construct or through the synergistic effects of their dimensions. Meanwhile, EO exerts a stronger performance influence when considered as an overall construct or in combination with specific DC dimensions. Originality/value To the best of the authors’ knowledge, this study is among the first to empirically investigate the direct and indirect effects of EIWB on firm performance through DCs and EO, considering them both in aggregate and as individual dimensions. The integration of fsQCA addresses the limitations of aggregate approaches by evaluating the distinct effects of individual components of DCs and EO on the innovation–firm performance process. This approach uncovers nuanced pathways enabling firms, particularly SMEs, to optimize limited resources and prioritize the most impactful dimensions to enhance performance.
Nguyen et al. (Fri,) studied this question.