Network embeddedness and innovation performance: a mediation moderation analysis using PLS-SEM

Purpose This study examines the impact of network embeddedness (NE) on innovation performance in small- and medium-sized enterprises (SMEs), and analyses absorptive capacity as mediator and openness as moderator. Design/methodology/approach Data were collected from 209 employees of SMEs using a convenient sampling technique. Partial least squares structural equation modeling in SmartPLS was used to analyze the various constructs. Findings The results exhibit a positive and significant relationship in NE and absorptive capacity. Also, this study found a positive and significant relationship in absorptive capacity and innovation performance. Moreover, absorptive capacity has a positive and significant mediation role in the relationship between NE and innovation performance. Also, openness positively moderated the relationship of NE and absorptive capacity. Practical implications SMEs should try to implement the functions of NE, such as interaction with other firms in higher frequency, developing trust among all parties, clear alliance among the partners to enhance innovation performance. Similarly, SMEs should focus on absorptive capacity and openness to enrich innovation performance. Originality/value This study adds in the current literature of the chosen constructs and empirically contributes the effects in the manufacturing industry of Jiangsu Province, China.