Sustaining SMEs through Business Model Innovation

Background of research & Problems - Small and medium enterprises (SMEs) contribute to 98.5 percent of business establishments, create 38.9 percent of gross domestic product (GDP) and employ 48.4 percent of workers in Malaysia. Nonetheless, Department of statistics Malaysia, https://www.smecorp.gov.my/index.php/en/policies/2020-02-11-08-01-24/sme-statistics . SMEs are vulnerable to the external environment. The implementation of movement control in Malaysia has forced more than 30,000 SMEs to cease their operations. FMT Reporters Covid-19 forces closure of 32,000 SMEs, Parliament told, 20 Nov 2020, https://www.freemalaysiatoday.com/category/nation/2020/11/09/32000- smes-forced-to-close-by-covid-19-parliament-told/ Thus, there is a need to relook into the survivability of SMEs. Innovation has been studied as a key factor for sustainable financial performance. This study suggests a more comprehensive measure for innovation through the business model innovation. Business model innovation (BMI) creates new values that changes both on organization value proposition to customer under its business modal. There are three main measurement which are value creation innovation, value proposition innovation that seek for new ways to increase customer retention and value capture innovation that let firms capture new revenue and cost structure enable the firm outperform competitor. BMI are been developed to be comprehensive model than other innovation, with this comprehensive measure allow BMI to delivered more sustainable performance and greater profit margin than other innovation. Beside this also help to develop measures for sustainable financial performance for SMEs and also to understand the indirect impact of leans startup, BMI and dynamic capabilities on sustainable financial performance through competitive advantages. Research Objective - The Objective of is paper is To develop the measures for sustainable financial performance for SMEs, To study the effect competitive advantage, business model innovation, lean startup capabilities and dynamic capabilities on sustainable financial performance of SMEs, To examine the indirect effect of business model innovation, lean startup and dynamic capabilities on sustainable financial performance through the competitive advantage and To investigate the mediating effect of business model innovation on the impact of lean startup capabilities and dynamic capabilities on sustainable financial performance of SMEs. Research Design / Method - Positivistic and Resource-based view. An important factor linking to longterm survivability of SMEs is innovation. Nonetheless, innovation has to be viewed from a comprehensive perspective instead of one single dimension. This article suggests the SMEs to adopt the comprehensive view of business model innovation, especially the model developed by Clauss (2016). Other than that, this study also will help to identify the measurement items for sustainable financial performance as well as the indirect impact and mediating effect of BMI to dynamic capabilities and leans startup through competitive advantages on financial sustainability. Expected Outcome - This comprehensive approach to innovation aims to allocate scarce resources to optimize the value creation through the innovation value chain in the SMEs. Through the adoption of business model innovation, the SMEs should have a higher chance of survivability. With this we able to identify the measurement for sustainable finance performance and the impact of competitive advantages, BMI, dynamics capabilities and lean startup capabilities on sustainable financial performance