Purpose
The purpose of this paper is to explore two basic research questions: what are the effects of information technology (IT) capability and employee empowerment on the innovativeness of small to medium‐sized enterprises (SMEs), and what are the effects of innovativeness and IT capability on firm performance in SMEs?
Design/methodology/approach
Data from 109 Polish SMEs were collected. In order to identify empirical dimensions of innovativeness, empowerment and IT capability, a factor analysis was carried out. Multiple regression analysis was employed to examine the effects of IT capability and employee empowerment on innovativeness, and the effects of IT capability and innovativeness on firm performance.
Findings
The following results are offered: innovation activity of SMEs is positively related to technological turbulence, climate for innovation, investments in innovation and use of IT in internal communications; innovation activity and IT knowledge have a positive effect on subjective measures of firm performance; and subjective measures of firm performance are significantly correlated with objective ones. The results of this study do not confirm that IT capability has a significant moderating effect on the relationship between innovativeness and firm performance.
Practical implications
The findings identify the factors that are significantly related to innovation activity and the dimensions of the constructs under study that contribute to firm performance in SMEs.
Originality/value
To the knowledge of the authors, no previous studies conducted with regards to SMEs have examined the relationships between innovativeness, empowerment, IT capability and firm performance in an integrated way. The findings suggest some direct and indirect relationships between different dimensions of these constructs.