Ethical Behavior and Organizational Innovation: Analysis of Small and Medium-Sized Enterprises in Latvia

Abstract Innovations can provide small and medium-sized enterprises (SMEs) a significant competitive advantage considering the ambiguous business environment. SMEs may face lower capacity and more constrained funding for long-term investments, however, understanding innovation in a broader sense and looking into organizational structures, behaviors and processes, SMEs have an opportunity to become more competitive. This study analyzes the impact of ethical behavior as a part of an organizational culture on organizational innovation performance in SMEs. Six hundred SMEs in Latvia were surveyed to assess whether employees follow the principles of business ethics in their work and what is the …