Abstract:

More recent research has shifted attention from tangible to intangible resources as it perceive to be more important from a strategic point of view, since they bring together more frequently the requirements necessary for producing sustainable advantage: to be valuable, rare and difficult to imitate and replace by competitors (Barney, 1991; Hitt, Ireland, Camp, & Sexton, 2001). SMEs with their important role in innovation have a number of resource disadvantages such as limited financial and technical manpower resources, narrow external technical networks, small marketing resources, and lack of management skill (Hashim, 2004) since there has been a dramatic increase in Malaysia SMEs development, this research reviews the SME resources and its contribution to innovation development. Particularly, with this backdrop, this paper attempts to review the development of innovation in Malaysia. For example, in Malaysia, a large number of SMEs provided parts and services to the multinational companies (MNCs) which have manufacturing operations in the country. At the same time, there are also many SMEs that create indigenous technology. Their contribution towards technology development pursues innovative products that will create firm competitive advantage. Furthermore, from the researcher observation, entrepreneurs in the globalization era mostly involved with incremental innovation in which the application of numerous variety of knowledge, skills and backgrounds have been adopted to previous products and services to create something new, customer focused but still product and service oriented. Their innovation mostly supported by numerous kinds of resources which is tangibles and intangibles. In the context of Malaysia manufacturing companies, reputational resources have been found given the highest impact on the product innovation performance compared to other factors. Survey was distributed randomly to the business owners and managers who work in various sizes of manufacturing firms. The response rate was 48% resulted from the personally administered questionnaire are considered highly favorable.