Empowerment and Innovation in Saudi Manufacturing SMEs: The Role of Organizational Culture on Performance

This study examines how administrative empowerment and innovative behavior influence organizational performance within Saudi manufacturing SMEs, and whether organizational culture conditions these effects. Drawing on Social Exchange Theory and Contingency Theory, the study conceptualizes empowerment and innovation as organizational resources that generate performance gains under supportive contextual environments. Survey data were collected from 142 senior managers and analyzed using partial least squares structural equation modeling. Results show that administrative empowerment exerts a strong positive effect on organizational performance (? = 0.487, p < 0.001), while innovative behavior also demonstrates a significant performance contribution. Organizational culture significantly strengthens the empowerment–performance relationship, indicating that empowerment becomes more impactful when cultural alignment is high. In contrast, culture does not meaningfully alter the effect of innovative behavior, suggesting that innovation remains beneficial across diverse cultural conditions. These findings refine theoretical understanding by integrating exchange and contingency perspectives to clarify when and how managerial practices translate into performance outcomes. Practically, the results underscore the strategic value of prioritizing administrative empowerment and sustaining innovative behavior as core drivers of competitiveness in manufacturing SMEs. The study offers evidence-based implications for managers and policymakers seeking to enhance organizational performance in alignment with national industrial development goals.