The Mediating Role of Innovation and Artificial Intelligence on SMEs Performance
DOI:
https://doi.org/10.65792/jombinov.v2i01.36Keywords:
Knowledge Management, Innovation, Artificial Intelligence, SME PerformanceAbstract
This study aims to examine the influence of knowledge management, Artificial Intelligence (AI), and innovation on the performance of Small and Medium Enterprises (SMEs) in Indonesia, as well as to analyze the mediating roles of innovation and AI in strengthening SME performance. The study employed a quantitative approach using survey data collected from 200 SMEs across various industrial sectors in Indonesia. Data analysis was conducted using Partial Least Squares–Structural Equation Modeling (PLS-SEM) to test the validity of the measurement model and examine the hypothesized relationships among variables. This study contributes to the literature by integrating knowledge management, AI adoption, and innovation within a unified framework to explain SME performance. It provides empirical evidence on the mediating roles of innovation and AI, highlighting their strategic importance in translating knowledge resources into superior organizational performance. The findings suggest that SME owners and managers should invest in structured knowledge management systems and AI-supported technologies to enhance decision-making, collaboration, and innovation capabilities. Policymakers are encouraged to support SMEs through training programs and technological infrastructure development to foster sustainable SME growth. This study is limited by its cross-sectional design and reliance on self-reported survey data, which may restrict causal interpretation. Future research is recommended to employ longitudinal designs, expand sample coverage, and incorporate additional contextual variables to deepen understanding of digital transformation and performance dynamics in SMEs.
Downloads
References
Al Suwaidi, F., Alshurideh, M., Al Kurdi, B., & Salloum, S. A. (2021). The Impact of Innovation Management in SMEs Performance: A Systematic Review. In Conference paper (pp. 720–730). Springer. https://doi.org/10.1007/978-3-030-58669-0_64
Alhosani, K., & Alhashmi, S. M. (2024). Opportunities, challenges, and benefits of AI innovation in government services: a review. Discover Artificial Intelligence, 4(1), 18. https://doi.org/10.1007/s44163-024-00111-w
Ali, A., Bahadur, W., Wang, N., Luqman, A., & Khan, A. N. (2020). Improving team innovation performance: Role of social media and team knowledge management capabilities. Technology in Society, 61, 101259. https://doi.org/10.1016/j.techsoc.2020.101259
Anatan, L., & Nur. (2023). Micro, Small, and Medium Enterprises’ Readiness for Digital Transformation in Indonesia. In Economies (Vol. 11, Number 6). https://doi.org/10.3390/economies11060156
Ayinde, L., Orekoya, I. O., Adepeju, Q. A., & Shomoye, A. M. (2021). Knowledge audit as an important tool in organizational management: A review of literature. Business Information Review, 38(2). https://doi.org/10.1177/0266382120986034
Botega, L. F. de C., & da Silva, J. C. (2020). An artificial intelligence approach to support knowledge management on the selection of creativity and innovation techniques. Journal of Knowledge Management, 24(5), 1107–1130. https://doi.org/10.1108/JKM-10-2019-0559/FULL/XML
Bressler, M. S., Bressler, L. A., & Bressler, M. E. (2011). A study of small business technology Adoption and utilization. Academy of Entrepreneurship Journal, 17(2).
Chaithanapat, P., Punnakitikashem, P., Khin Khin Oo, N. C., & Rakthin, S. (2022a). Relationships among knowledge-oriented leadership, customer knowledge management, innovation quality and firm performance in SMEs. Journal of Innovation & Knowledge, 7(1), 100162. https://doi.org/10.1016/j.jik.2022.100162
Chaithanapat, P., Punnakitikashem, P., Khin Khin Oo, N. C., & Rakthin, S. (2022b). Relationships among knowledge-oriented leadership, customer knowledge management, innovation quality and firm performance in SMEs. Journal of Innovation & Knowledge, 7(1), 100162. https://doi.org/10.1016/J.JIK.2022.100162
Chatterjee, S., & Kumar Kar, A. (2020). Why do small and medium enterprises use social media marketing and what is the impact: Empirical insights from India. International Journal of Information Management, 53(March), 102103. https://doi.org/10.1016/j.ijinfomgt.2020.102103
Deb, M., & Lomo-David, E. (2014). An empirical examination of customers’ adoption of m-banking in India. Marketing Intelligence & Planning, 32. https://doi.org/10.1108/MIP-07-2013-0119
Deranty, J. P., & Corbin, T. (2024). Artificial intelligence and work: a critical review of recent research from the social sciences. AI and Society, 39(2), 675–691. https://doi.org/10.1007/S00146-022-01496-X
Durst, S., Edvardsson, I. R., & Foli, S. (2023). Knowledge management in SMEs: a follow-up literature review. Journal of Knowledge Management, 27(11), 25–58. https://doi.org/10.1108/JKM-04-2022-0325/FULL/PDF
Fernandes, K. J., Milewski, S., Chaudhuri, A., & Xiong, Y. (2022). Contextualising the role of external partnerships to innovate the core and enabling processes of an organisation: A resource and knowledge-based view. Journal of Business Research, 144, 146–162. https://doi.org/10.1016/J.JBUSRES.2022.01.091
Ferraris, A., Giachino, C., Ciampi, F., & Couturier, J. (2021). R&D internationalization in medium-sized firms: The moderating role of knowledge management in enhancing innovation performances. Journal of Business Research, 128, 711–718. https://doi.org/10.1016/j.jbusres.2019.11.003
Hock-Doepgen, M., Clauss, T., Kraus, S., & Cheng, C.-F. (2021). Knowledge management capabilities and organizational risk-taking for business model innovation in SMEs. Journal of Business Research, 130, 683–697. https://doi.org/10.1016/j.jbusres.2019.12.001
Idrees, H., Xu, J., Haider, S. A., & Tehseen, S. (2023). A systematic review of knowledge management and new product development projects: Trends, issues, and challenges. Journal of Innovation & Knowledge, 8(2), 100350. https://doi.org/https://doi.org/10.1016/j.jik.2023.100350
Jin, G., Jiang, J., & Liao, H. (2024). The work affective well-being under the impact of AI. Scientific Reports, 14(1), 25483. https://doi.org/10.1038/s41598-024-75113-w
Kianto, A., Sáenz, J., & Aramburu, N. (2017). Knowledge-based human resource management practices, intellectual capital and innovation. Journal of Business Research, 81, 11–20. https://doi.org/10.1016/J.JBUSRES.2017.07.018
Kline, R. B. (2013). Beyond significance testing: Statistics reform in the behavioral sciences (2nd ed.). American Psychological Association. https://doi.org/10.1037/14136-000
Liu, Q., University, G., Korea, S., & Li, J. (2022). The Progress of Business Analytics and Knowledge Management for Enterprise Performance Using Artificial Intelligence and Man-Machine Coordination. Https://Services.Igi-Global.Com/Resolvedoi/Resolve.Aspx?Doi=10.4018/JGIM.302642, 30(11), 1–21. https://doi.org/10.4018/JGIM.302642
Liu, W., & Si, S. (2022). Disruptive Innovation in the Context of Retailing: Digital Trends and the Internationalization of the Yiwu Commodity Market. Sustainability (Switzerland), 14(13). https://doi.org/10.3390/SU14137559
Ode, E., & Ayavoo, R. (2020). The mediating role of knowledge application in the relationship between knowledge management practices and firm innovation. Journal of Innovation & Knowledge, 5(3), 210–218. https://doi.org/10.1016/j.jik.2019.08.002
Olsowski, S., Schlögl, S., Richter, E., & Bernsteiner, R. (2022). Investigating the Potential of AutoML as an Instrument for Fostering AI Adoption in SMEs. Communications in Computer and Information Science, 1593 CCIS. https://doi.org/10.1007/978-3-031-07920-7_28
Omotayo, F. O. (2015). Knowledge management as an important tool in organisational management: A review of literature. Library Philosophy and Practice, 2015.
Riwu, Y., & Mattunruang, A. (2024). Two Views on Open Innovation: The Source of Dynamic Capabilities vs the Threat to Corporate Stability. Foresight and STI Governance, Vol 18(3), 29–39. https://doi.org/10.17323/2500-2597.2024.3.29.39
Ruel, E., Wagner, W., & Gillespie, B. (2016). The Practice of Survey Research: Theory and Applications. https://doi.org/10.4135/9781483391700
Serenko, A. (2013). Meta-analysis of scientometric research of knowledge management: Discovering the identity of the discipline. Journal of Knowledge Management, 17(5), 773–812. https://doi.org/10.1108/JKM-05-2013-0166/FULL/XML
Shaikh, I., & Vasudevan, H. (2020). An Empirical Analysis of the Strategic, Organizational, Financial and Technological Issues in the Implementation of Knowledge Management in Indian Automotive SMEs (pp. 135–145). https://doi.org/10.1007/978-981-15-4485-9_15
Singh, S. K., Gupta, S., Busso, D., & Kamboj, S. (2021). Top management knowledge value, knowledge sharing practices, open innovation and organizational performance. Journal of Business Research, 128, 788–798. https://doi.org/10.1016/J.JBUSRES.2019.04.040
TH. Tambunan, T., & Busnetti, I. (2024). Recent Evidence on the Digitalization Process in Indonesia’s Micro and Small Enterprises. International Journal of Current Science Research and Review, 07(08). https://doi.org/10.47191/ijcsrr/v7-i8-18
Türkeş, M. C., Oncioiu, I., Aslam, H. D., Marin-Pantelescu, A., Topor, D. I., & Căpuşneanu, S. (2019). Drivers and barriers in using industry 4.0: A perspective of SMEs in Romania. Processes, 7(3), 1–20. https://doi.org/10.3390/pr7030153
Uygungil-Erdogan, S., Şahin, Y., Sökmen-Alaca, A. İ., Oktaysoy, O., Altıntaş, M., & Topçuoğlu, V. (2025). Assessing the Effect of Artificial Intelligence Anxiety on Turnover Intention: The Mediating Role of Quiet Quitting in Turkish Small and Medium Enterprises. Behavioral Sciences, 15(3), 249. https://doi.org/10.3390/bs15030249
Wall, L. D. (2018). Some financial regulatory implications of artificial intelligence. Journal of Economics and Business, 100, 55–63. https://doi.org/10.1016/J.JECONBUS.2018.05.003
Wilczynska, M., Walenia, A., Dabek, A., Salabura, D., & Kot, H. (2024). Potential Impact of Artificial Intelligence on Small and Medium Enterprises Innovation in the EU: A Perspective from Poland. Markets, Globalization and Development Review, 9(2), 1–19. https://doi.org/10.23860/MGDR-2024-09-02-02
Wold, S., Sjöström, M., & Eriksson, L. (2001). PLS-regression: a basic tool of chemometrics. Chemometrics and Intelligent Laboratory Systems, 58(2), 109–130. https://doi.org/https://doi.org/10.1016/S0169-7439(01)00155-1
Worthington, Roger L, & Whittaker, Tiffany A. (2006). Scale Development Research: A Content Analysis and Recommendations for Best Practices. The Counseling Psychologist, 34(6), 806–838. https://doi.org/10.1177/0011000006288127
Yi, L., Wang, Y., Upadhaya, B., Zhao, S., & Yin, Y. (2021). Knowledge spillover, knowledge management capabilities, and innovation among returnee entrepreneurial firms in emerging markets: Does entrepreneurial ecosystem matter? Journal of Business Research, 130, 283–294. https://doi.org/10.1016/j.jbusres.2021.03.024
Yuri S. Fa’ah, & Dominikus Kopong T. Aman. (2025). Exploring the Relationship Between Financial Literacy and Financial Capability Among Micro, Small, and Medium Enterprises in Kupang City. Journal of Management and Business Innovation, 1(01), 40–52. https://doi.org/10.65792/jombinov.v1i01.28
Zhang, B., & Peng, B. (2024a). Artificial Intelligence and the Development of “Specialized, Refined, Unique, and Innovative” Small- and Medium-Sized Enterprises. Managerial and Decision Economics. https://doi.org/10.1002/mde.4407
Zhang, B., & Peng, B. (2024b). Artificial Intelligence and the Development of “Specialized, Refined, Unique, and Innovative” Small- and Medium-Sized Enterprises. Managerial and Decision Economics. https://doi.org/10.1002/mde.4407
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Yonas Ferdinand Riwu, Klaasvakumok Jehezkielomi Kamuri, Sonia Virgarini Nawi (Author)
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
