Empirical Analysis On The Role Of Government Support And Human Capital Dynamics On Innovative Performance Of Hefei SMEs

The inclination of economic development has been witnessed and become vital throughout the world and densely competitive with more and more saturated market conditions.With such a competitive situation government supports deemed pre-requisite for research and development activities not only for large organizations but mainly for small and medium enterprises(SMEs).SMEs plays a pivotal role in the regional and national development of the economy,but due to inbuilt vulnerable nature of SMEs,it gets affected the most and urged to build capabilities to deal unprecedented market flux.The study incorporated Input-Process-Output modeling as a theoretical framework to investigate the innovative performance of SMEs.Research embed the external forces that include government supports with relevant contextual human capital dynamics to analyze the impact on SMEs absorptive capacity to drive innovative performance.China's policy structure spread through central government to provincial to local level spectrum but possessed different outcomes in provinces and cities.For this research,data collected from 128 SMEs operating in the Hefei city(capital city of Anhui province,China)through self,administered questionnaire survey format.For testing the research model and relationship outcomes,the mediating role of absorptive capacity for both observed and latent variables,Smart PLS-SEM v 3.0 software has been used.Study findings suggest that inputs(government support and human capital dynamics)possess significance and holds a strong relationship towards the impact on process(absorptive capacity)and output(innovative performance)of the firms'.All variables of the study correlated well with innovative performance of SMEs,while government support has shown inverse relationship.The study aimed to assist government bodies and SMEs leadership in bridging gap of research development and innovation driven agenda.The current policy condition of Hefei city has been discussed,and the study concludes with recommendations for policy makers and SMEs managers for driving out progressive structure to achieve a common goal of innovation.