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In the current dynamic environment, technological capabilities and open innovation play vital roles in operational performance of small and medium enterprises (SMEs). Thus, the purpose of this paper is to explore the influence of technological capabilities on open innovation and consequent impact on perceived operational performance of the SMEs in Malaysia by considering the moderating effect of environmental dynamism.

This study is quantitative in nature and used a survey questionnaire to gather responses from 202 SME owners in Malaysia. The data were analyzed with SmartPLS software, as it used structural equation modeling.

The results show that technological capabilities significantly influence open innovation whereas open innovation plays an instrumental role to achieve operational performance of the SMEs. Interestingly, environmental dynamism was found to have a negative moderating role in the relationship between open innovation and perceived operational performance.

This paper will assist SME managers in making effective decisions while using technological capabilities and open innovation practices. Managers need to be aware of the vital role of technological capabilities to build external and internal collaboration and incorporate their knowledge that is necessary for open innovation practices. The results also assist managers in a way that in the dynamic and competitive environment SMEs should take further proactive actions to compete in the market to survive.

This study provides new insights by dismantling technological capabilities and open innovation to understand further the effects of technological capabilities on open innovation and its consequence on a firm’s operational performance.

The objectives of this study is first to assess the effect of organizational antecedents on knowledge management capability and its effect on innovation strategy through the moderating effect of environmental dynamism.

The data were collected from SMEs in central region of Malaysia through a cross-sectional survey of 202 owners and analyzed through structural equation modeling using SmartPLS software.

The results show that while formal structure, selection policies, incentives and training and development policies have positive affect on knowledge management capability, there is no effect of innovation culture on knowledge management capability. Knowledge management capability has a positive and significant effect on innovation strategy. Interestingly, the findings show that environmental dynamism strengthens the positive effect of knowledge management capability on innovation strategy.

The findings of this study emphasize on the potential of collaboration among people for creating effective knowledge sharing in organizations and modalities in order to successfully design a collaborative knowledge-based work environment.

The model links organizational antecedents with knowledge management capability and the critical role of knowledge management capability on innovation strategy of SMEs considering environmental dynamism.