INNOVATION AND BUSINESS PERFORMANCE OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE FAST-MOVING CONSUMER GOODS SECTOR: THE ROLE OF LEADERSHIP AND ORGANIZATIONAL LEARNING

Abstract

This study investigates how innovation improves the business performance of small and medium-sized enterprises (SMEs) in the fast-moving consumer goods (FMCG) sector in Ho Chi Minh City, with particular attention to the enabling roles of leadership and organizational learning. Drawing on the resource-based view and dynamic capabilities perspective, the study develops a sequential mediation model linking leadership, organizational learning, innovation, and business performance. Survey data were collected from 270 owners and chief executive officers of SMEs in the food and beverage segment and analyzed using partial least squares structural equation modeling (PLS-SEM). The results indicate that innovation has a positive influence on business performance, especially in an environment characterized by short product life cycles, intense competition, and rapid shifts in distribution channels. Leadership strengthens innovation by setting strategic priorities and allocating resources, while organizational learning helps firms acquire, share, and institutionalize market knowledge. More importantly, the findings reveal a sequential mechanism in which leadership enhances organizational learning, which in turn promotes innovation and ultimately improves business performance. The study offers practical implications for SME managers seeking to build innovation-oriented leadership and learning systems.