How beneficial are relational capital and technology orientation for innovation? Evidence from Mexican SMEs

Globally, small- and medium-sized enterprises (SMEs) are engines of economic growth and job creation. After the pandemic, innovation activities have become more critical than ever as a generator of competitiveness. Therefore, we need to better understand the factors that lead to innovation in SMEs. This study aims to analyze the role of relational capital and technology orientation in innovation to appreciate its final impact on firm performance. The main results reveal a strong positive effect of relational capital on innovation, but the effect is not so strong as firm performance. We also found a strong positive effect of relational capital on technology orientation. Finally, we offer some clues in the debate on technology as a source of innovation and how relational capital and technology orientation are related to a firm's performance. The results reveal significant implications for innovation policies and relational capital strategies for SMEs.