Innovation is recognized as a tool that managers can use to address the unforeseen consequences of sudden changes in business conditions (Wenzel et al., 2021).

Using a sample of 259 SME managers in Saudi Arabia, Adam and Alarifi (2021) found that the innovation practices adopted by SMEs to address the repercussions of COVID-19 had a positive impact on performance and the likelihood of business survival, an effect further strengthened by external support.

Aiming to contribute to the literature on SME crisis management mechanisms, Clauss et al. (2022) examined the role of temporary business model innovation (BMI) as a tool for SMEs to overcome a crisis. They found that temporary BMI drawing on existing core competencies and positioned in nascent industries represents a viable means by which organizations can adapt to changing external conditions.

Through exploratory research based on phone interviews with 329 managers from SMEs in Spain, Clemente-Almendros et al. (2025) showed that COVID-19-related disruptions to inbound logistics, operations, and marketing had a positive influence on innovation outcomes in SMEs. They also found that the presence of female managers was associated with stronger innovation outcomes, whereas family-owned SMEs exhibited comparatively weaker innovation performance.

However, the capacity to undertake crisis-induced innovation is heterogeneously distributed across firms and varies depending on both external and internal factors.

Beglaryan et al. (2025) empirically examined the propensity of SMEs in Armenia to engage in product, process, and organizational innovation under uncertainty, and how this propensity varies depending on the manager’s gender. Their results confirmed a positive relationship between uncertainty and innovation and indicated that male managers have a higher tendency to pursue innovation under conditions of external turbulence.

Lien and Timmermans (2024) showed that pre-crisis experience with innovation and organizational agility are key characteristics associated with higher levels of innovation in response to a crisis, a greater likelihood of increasing resources allocated to innovation during a crisis, and higher expected post-crisis value from innovations undertaken in response to a crisis.

Klyver and Nielsen (2024) examined the extent to which SMEs’ pre-crisis preparedness affects their choice of coping strategies during a crisis. Their findings demonstrate that organizational preparedness—characterized by less formalized structures—and cultural preparedness—characterized by entrepreneurial orientation—enable SMEs to be more productive in hostile environments, as they are more likely to adopt innovation strategies in response to a crisis.

Finally, Angelshaug et al. (2025) demonstrated that the greater the turbulence in the external environment, the broader the scope of business model innovation required. In other words, the number of business model components that a firm needs to modify increases with the severity of the crisis it faces.

Entrepreneurial orientation emerged as a concept within the strategic management literature. It is defined as a firm’s innovativeness, proactiveness, and risk-taking tendencies when faced with market opportunities (Miller, 1983) and has been identified as a key factor in enhancing the performance of small, medium, and micro enterprises (Beltramino et al., 2023). Covin and Slevin (1991) describe entrepreneurship as a dimension of strategic posture, characterized by a firm’s risk-taking propensity, tendency to act in competitively aggressive and proactive ways, and reliance on frequent and extensive product innovation. For the purposes of this study, we draw only on the innovativeness dimension of entrepreneurial orientation, which reflects a firm’s tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes.

In characterizing innovativeness, considerable scholarly attention has been devoted to understanding how to improve firms’ capacity to innovate (Damanpour, 1987, 1996; Koc & Ceylan, 2007; Mavondo et al., 2005). At the individual level, the drivers of innovation include creativity, leadership, and employee motivation practices (Dani & Gandhi, 2022). In this study, we focus on the individual level—specifically, managers across various functional areas (strategic, core, and support) and with varying levels of educational attainment and seniority.

Damanpour (1996) argued that managers’ attitudes toward change may affect decisions related to innovation, while Heine et al. (2003) demonstrated that technological outcomes are heavily dependent on management processes. Zaccaro and Banks (2004) highlighted the role of managerial competencies and skills in managing change. More broadly, managers are central actors in organizations whose skills and abilities account for differences in organizational capabilities and efficiency (Lopez-Cabrales et al., 2006).

According to Muller and Zenker (2001), the knowledge necessary for innovation can be either generated within the organization or acquired from the external environment—from partners, competitors, suppliers, and customers. Drawing on turbulent external environments, managers can adapt internal structures and processes through the acquisition of new knowledge and changes in routines to meet customer needs. Consequently, managers’ possession of an appropriate behavioral repertoire for driving improvement is crucial for undertaking innovation (Martínez-Ros & Orfila-Sintes, 2012), and their perception of innovation ultimately influences the degree to which it is fostered within the firm (Iorgulescu & Răvar, 2013).

Dutta et al. (2005) defined capability as the ability to transform resources into outcomes, involving the synchronization of tasks and the utilization of resources to attain a particular result—a process through which individuals or organizations construct the building blocks of business competency. Accordingly, managerial capabilities represent combinations of knowledge, experience, and productive attributes, as well as the functional and technical skills required to perform tasks, solve problems, and operate effectively under uncertainty (Campion et al., 2011; Leblanc & James, 2010; Marcus et al., 2007).

Heubeck (2023) examined the specific managerial capabilities that drive innovation in today’s digital economy, focusing on managers’ dynamic capabilities and their three underlying drivers—managerial human capital, social capital, and cognition—as direct antecedents of digital firms’ innovativeness. The findings demonstrate that only a complete portfolio of managers’ dynamic capabilities promotes innovativeness in digital firms.

Shaw et al. (2024) demonstrated that successful SME innovations often depend on managers or owners who foster participatory environments and decentralized management structures, which empower employees to engage actively in the absorption of new knowledge and thereby drive innovation.

Given the importance of identifying the managerial characteristics that lead managers to pursue innovation, this study explores how the propensity to innovate under uncertainty varies according to managerial seniority, educational background, and whether the manager occupies a strategic or non-strategic position.

Since the development of the resource-based view (RBV), managerial capabilities have been viewed as key determinants of resource utilization and subsequent firm growth (Brinckmann & Hoegl, 2011; Burger‐Helmchen, 2009; Colombo & Grilli, 2005). According to Camisón (2005), managerial capabilities are an important source of competitive advantage, as they determine how an organization’s resources and capabilities are deployed and ultimately converted into valuable products and value creation. The author distinguishes two components of managerial capabilities: a technical component, reflecting managers’ know-how, and a cognitive component, reflecting management’s values and personality. Macrae (1992) further suggests that the education, training, and experience of senior managers are major distinguishing factors between high-growth and low-growth SMEs. Prior studies also document a positive relationship between human capital and entrepreneurship, showing that higher levels of education and accumulated experience are positively associated with the formation of innovative ventures (Dvouletý et al., 2022; Hanák & Grežo, 2020; Martin et al., 2013).

Managing innovation requires considerable experience, knowledge, and training on the part of managers. Knowledge relevant to innovation can be derived from both experience and formal qualifications (Martínez-Ros & Orfila-Sintes, 2012). A manager’s experience is shaped by time in the profession, decision-making exposure, training, international career experience, and the variety of prior roles held (Camisón, 2005), while qualifications reflect the manager’s educational background—particularly the level of managerial and technological education attained (Camisón-Haba et al., 2019).

In their study of the hospitality industry, Martínez-Ros and Orfila-Sintes (2012) found that although managers’ skills and capabilities are positively related to innovation-related decisions and their implementation, experience alone is not sufficient to manage innovation-driven change. By contrast, Mabula et al. (2020) demonstrated that managerial experience in SMEs has a positive impact on the ability to manage dynamic resources—such as technology and finances—effectively, thereby enhancing firm innovation and competitive advantage.

Rubio-Andrés et al. (2023) showed that, under external turbulence induced by the pandemic, commitment to innovation in SMEs may be more consequential for managers with higher levels of education. The authors demonstrated empirically that more highly educated managers are better able to convert SMEs’ innovative capacity into superior firm performance, whereas less educated managers find it more difficult to translate innovation into business results.

The extant literature also establishes that top managers play an essential role in fostering organizational innovation by identifying and exploiting opportunities and creating an environment conducive to the generation and diffusion of knowledge (Al-Refaie et al., 2011; Denti & Hemlin, 2012; Elenkov et al., 2005; Huang et al., 2009; Jung et al., 2003; Kim et al., 2012; Makri & Scandura, 2010; Ryan & Tipu, 2013). Nevertheless, the role of middle managers in promoting firm innovativeness should not be overlooked. While senior leaders recognize the need for continuous innovation, lower- and middle-level managers—with their direct proximity to day-to-day operations—are often best positioned to generate new ideas (Kanter, 2004).

Expanding the concept of dynamic managerial capabilities to middle management, Greven et al. (2023) theorized that middle managers’ capabilities to sense, seize, and reconfigure opportunities and assets enhance product ambidexterity. Their results showed that middle managers’ general human capital (specialized education), structural social capital (managerial ties), and relational social capital (trust) are positively related to product ambidexterity, whereas their cognitive social capital (solidarity) is negatively related.

Using data from Chinese companies, Xu et al. (2023) found that a seniority culture is negatively associated with innovation efficiency. Similarly, Ying et al. (2022), also drawing on data from China, found a negative association between seniority and corporate innovation, particularly among high-tech firms.

From the perspective of dynamic capabilities theory, we posit that lower- and middle-level managers are often closer to operational processes, customer feedback, and emerging inefficiencies. This proximity may enhance their ability to sense environmental turbulence and seize the opportunities it presents. By contrast, top-level managers, with their broader view of long-term positioning and greater distance from day-to-day operations, may be less attuned to environmental changes that give rise to innovation opportunities.

Furthermore, an organization’s dynamic capabilities are substantially shaped by managers’ capacity to interpret ambiguous information, envision alternative courses of action, and orchestrate resource reconfigurations. A higher level of education may therefore play an important role in strengthening these capabilities through broader knowledge bases and stronger analytical skills.

Based on the literature reviewed above, we propose the following hypotheses:

H1: Lower- and middle-level managers tend to engage more in innovation activities (product, process, and organizational) under uncertainty than top-level managers.

H2: Managers with higher levels of education tend to engage more in innovation activities (product, process, and organizational) under uncertainty than those with lower levels of education.

Dynamic and uncertain environments present firms with value-creation opportunities in which the potential for competitive advantage resides. Managers must therefore be quick to identify and exploit these opportunities to secure a superior competitive position.

The resource-based view (RBV) posits that a firm’s competitive advantage lies in its unique and inimitable strategic resources—resources that are valuable, rare, inimitable, and non-substitutable (Barney, 1991). Such resources are difficult to accumulate and are characterized by causal ambiguity, properties that confer sustainable competitive advantage. However, a strategic resource generates value only when it embeds viable opportunity options that management can seize in a timely manner by actively managing firm-specific risk through a business model that is scalable, flexible, and sustainable. It is management’s opportunity focus and timely exploitation of the valuable options embedded in a strategic resource that ultimately render that resource valuable. Porter (1985) further argues that competitive advantage derives not from a firm’s resources alone but from the value-creating activities consistent with its strategic position—whether a cost leadership or differentiation strategy—and from the activity drivers that support those value-creating activities.

Heubeck and Meckl (2022) examined the role of managerial capabilities as antecedents of strategic change and firm performance. Using a sample of German Industry 4.0 firms, they provided new insights into the significance of managerial capabilities in a digital economy. Drawing on dynamic managerial capabilities theory, the study demonstrated that managerial human capital—composed of leadership and entrepreneurial skills—is a critical facilitator of digital business model transformation and resultant firm performance. Focusing on the role of individual-level behaviors and actions in the digital transformation of international SMEs, Jafari-Sadeghi et al. (2023) found that entrepreneurs act as strategic transformation managers capable of driving firms toward successful digitalization. The authors expanded the antecedents of the theory of planned behavior by grouping them into four categories: managers’ capabilities in technology management, knowledge management, entrepreneurial and innovation management, and leadership and managerial capacities.

Singh et al. (2023) noted that recent research on strategic leadership and innovation has shifted its focus toward digitalization, which is transforming how business is conducted. In particular, the digital transformation facilitated by emerging technologies has given rise to new business models and forms of governance, underscoring the need for strategic leaders to identify and develop the core competencies and key success factors that enable them to steer their organizations toward timely and relevant innovation—maximizing value creation and sustaining competitive advantage.

Viewed through the lens of dynamic capabilities theory, managers in strategic functions are directly engaged in scanning market signals, evaluating competitive threats, and identifying opportunities for organizational renewal, whereas managers in support and primary functions tend to focus on maintaining efficiency, ensuring continuity, and executing established routines. Managers in strategic functions are therefore better positioned to sense environmental changes, seize innovation opportunities, and orchestrate resource reconfigurations.

H3: Managers involved in strategic functions tend to engage more in innovation activities (product, process, and organizational) under uncertainty than those in support and primary functional areas.

We use data from the GLOBE-2020 survey to test our hypotheses. This survey was administered by the Center for Business Research and Development at the American University of Armenia and was conducted among small and medium-sized Armenian enterprises. In line with the EU definition, the SME classification in Armenia is based on three criteria: employment, turnover, and balance sheet total. Specifically, micro-enterprises are defined as having fewer than ten employees and an annual turnover or balance sheet total not exceeding AMD 100 million (€185,580). Small enterprises are defined as having fewer than 50 employees and an annual turnover or balance sheet total not exceeding AMD 500 million (€927,900). Medium-sized enterprises are defined as having fewer than 250 employees, an annual turnover not exceeding AMD 1,500 million (€2,783,700), or an annual balance sheet total not exceeding AMD 1,000 million (€2,041,380)1.

Data collection was conducted across two periods—September 28 to October 1, 2020, and November 26 to December 31, 2020—using the computer-assisted telephone interviewing (CATI) method, yielding a final sample of 319 respondents. The questionnaire comprised 86 items, and each interview lasted an average of 51 minutes. To reduce common method bias, all interviewers attended a three-day training session prior to data collection, covering the survey’s main objectives and procedural and methodological requirements. To further mitigate bias, the questionnaire included both positively and negatively worded items. For quality control purposes, all interviews were subject to the following verification procedures: supervision by the data collection coordinator, callback checks, and logic and duration review (100% of interviews). Following this review, six responses that failed to meet quality standards were removed from the dataset.

For the purposes of our analysis, the data were cleaned to include only managers employed by Armenian SMEs, resulting in a final sample of 213 responses from 136 SMEs.

The demographic, innovation, and uncertainty sections of the questionnaire were used to test our hypotheses. These sections comprised items measured using five-point and seven-point Likert scales, as well as polar questions, which were subsequently coded and grouped for analysis.

Educational attainment, tenure, and position type. The demographic section of the questionnaire included items relating to managers’ educational attainment, tenure, and position type (see Table A1).

Innovation. The innovation section comprised three sets of items covering product, process, and organizational innovation. Definitions were drawn from the Community Innovation Survey (Eurostat, 2018) and the Oslo Manual (OECD, 2005). Product innovation is defined as “a new or improved good or service that differs significantly from the firm’s previous goods or services and that has been introduced to the market” (Eurostat, 2018). Process innovation is defined as “a new or improved business process for one or more business functions that differs significantly from the firm’s previous business processes and that has been implemented within the firm” (Eurostat, 2018). Organizational innovation is defined as “a new organizational method in business practices, workplace organization, or external relations” (OECD, 2005). To quantify innovation, we used measures adapted from Daft (1978), Kimberly and Evanisko (1981), and Damanpour (1987).

Environmental uncertainty. This variable was measured using the market orientation framework introduced by Jaworski and Kohli (1993).

To test our hypotheses, average scores for uncertainty and for product, process, and organizational innovation were calculated from items using a five-point Likert scale (1 = low, 5 = high).

Table 1 presents the variables used in the analysis along with the items comprising each measure. Uncertainty was measured as the mean score of managers’ perceptions of two phenomena: the degree to which customer or beneficiary preferences change over time and the pace of technological change in their field (min = 1, max = 5). Product innovation was measured as the mean score of managers' perceptions of the development and market introduction of new products or services and the time and human resources devoted to new product or service development relative to competitors. Process innovation was measured as the mean score of three items capturing the extent of changes to existing processes, the initiation of new process development, and responsiveness to new processes developed by other firms in the same field. Organizational innovation was measured as the mean score of three items capturing the extent of administrative innovation, the search for new administrative systems, and the initiative to integrate new administrative systems into the organization.

To assess the internal consistency of the multi-item constructs used in this study, reliability analysis was conducted using Cronbach’s alpha (α). Product innovation demonstrated acceptable reliability (α = 0.73), while organizational innovation exhibited high internal consistency (α = 0.90). Environmental uncertainty returned a lower coefficient (α = 0.48), which may be attributable to the small number of items used to capture this construct. Process innovation was measured using a single item and therefore did not permit calculation of internal consistency. The reliability results are presented in Table 2.