Does Innovation Instigated by Market Orientation and Financial Literacy Impact Business Performance in SMEs in the Eastern Province of Sri Lanka?

Document Type : Primary Research paper


1 Department of Accountancy & Finance, South Eastern University of Sri Lanka

2 Department of Marketing Management, South Eastern University of Sri Lanka


The study’s objective of the study was to examine the effect of market orientation and financial literacy on the performance of business of the small and medium enterprises in the Eastern province of Sri Lanka with the mediating effect of innovation. The study used primary data collected from 199 respondents in the region. SmartPLS 3 was used to analyze the data. Finding indicates that innovation does not mediate between market orientation and business performance. However, there is complementary mediation of innovation between financial literacy and business performance. Findings also suggest that market orientation adaptation among the small and medium enterprises is lacking and hence, it is important for these SMEs in the region to adapt marketing orientation as a philosophy which will help achieve the business performance. This study also rises a requirement of training the employees and managers in the aspects of market orientation along with financial literacy to enjoy the competitive advantage among industries.