THE ROLE OF ORGANIZATIONAL CULTURE AND INNOVATION IN BAHRAIN SMES

Abstract

Small and medium-sized enterprises (SMEs) constitute an important component of Bahrain’s economic advancement, particularly through their contributions to job creation, entrepreneurial activity, and economic diversification. Nevertheless, despite substantial governmental and institutional initiatives intended to support this sector, Bahraini SMEs continue to experience considerable business failure, creating concerns about their ability to achieve sustained growth and long-term viability. Against this backdrop, this study examines organisational culture and innovation as key determinants of SME development and progress in Bahrain. Building on the existing body of SME development literature, the study assesses the extent to which these factors shape business performance and organisational sustainability within the Bahraini environment. A quantitative research design was adopted, with 300 questionnaires distributed to SME owners and managers operating across various sectors in Bahrain. Of these, 120 completed questionnaires were returned and subjected to descriptive and inferential statistical analysis. The findings demonstrate that organisational culture and innovation both make significant contributions to SME performance. Organisational culture was identified as a prominent influence, with respondents highlighting shared values, effective leadership, competitiveness, responsiveness to market conditions, and sustainable growth as important organisational attributes. The findings further indicate that SMEs characterised by robust cultural foundations and stronger commitment to innovation are comparatively better equipped to address operational difficulties and maintain long-term organisational sustainability.