This study examines the performance of wholesale and retail small and medium enterprises in Thailand, which are integrating innovations in human resource practices, innovation capabilities, and competitive advantage. The data sample comprises 260 small and medium enterprises located in the Eastern Economic Corridor, Thailand. The data were analyzed using quantitative and structural equation modeling. The study finds a significant relationship between innovations in human resource practices, innovation capabilities, competitive advantage, and SME performance. The significant success factors of innovations in human resource practices indirectly affect SME performance through the mediation of innovation capabilities and competitive advantage. These outcomes help develop long-term and business performance effectiveness, as the essential human resource factors and innovation capabilities practices of the current extremely competitive industry will intensify with the digital disruption era.
The coronavirus disease 2019 (COVID-19) pandemic and digital disruption have caused several challenges, uncertain circumstances, and the transformation of economic landscapes that call for innovative thinking and adaptability in human resource (HR) operations (Azizi et al., 2021). Technological innovations are now actively reinventing the HR management (HRM) landscape globally (Vrontis et al., 2021). HRM is recognized as an essential success factor to boost business performance, attract new charismatic employees, and develop personnel mindsets and behaviors, thus generating a sustainable competitive advantage (CA; Hoon et al., 2019).
Unpredictability is a concern among the executive board of enterprises of some countries, such as China, that are intensely changing their business conditions. To maintain benefits and adapt to dynamic business conditions represented by innovation, enterprises must develop innovative strategic plans to adjust to unprecedented changes (Xiu et al., 2017).
Small and medium enterprises (SMEs) face several challenges in human capital development; innovation and technology adoption; financing access; market competitiveness; infrastructure; and legal and regulatory environment, which affect their performance (Wan Hooi & Sing Ngui, 2014). In Southeast Asia, innovation affects all the elements of an enterprise, from functional methods to strategic plans and innovative business models. It helps in the evolution of a critical policy for the existence and development of organizations and personalities (Agarwal et al., 2017).
6.3. Limitations and further research
This research found that InHR has indirect effects on SME performance through the mediation of IC and CA. Nevertheless, the outcomes of this research are restricted because only quantitative information was used. The findings of this study are based on limited survey responses (260 responses) from Thai SMEs. Additional limitations include the sectors (wholesale and retail) and region (Thailand) to which this study was restricted. Thus, results may be comprehensive only for the assessed sectors and region, but not for other sectors or emerging countries. Finally, the conceptual framework may not be acceptable to every party. It may only benefit the groups interested in innovations in HR and IC.
Further research should use qualitative information to analyze the associations between InHR, IC, CA, and SME performance. For instance, semi-structured interviews can be used for an in-depth understanding of the challenges in developing InHR and IC in SMEs, and additional responses can help further strengthen the findings and assist in generalization across the sector. Finally, using this research model, future studies could extend across dissimilar sectors and analyze surveys in other countries.