Strategists have unique skills and abilities to connect the past and the present in order to predict what might happen in the future. The current study is the culmination of a number of research ideas in the field of Strategic Thinking (ST), Strategic Planning (SP) and Strategic Innovation (SI) in relation of Human Capital (HC). The survey method was used to collect data from 235 SMEs in the manufacturing industry of Yemen. Results indicate that ST, SP and SI have a significant effect on HC. The mediating effects of HC on the relationship between ST, SP and SI and SMEs’ performance were also examined. Results indicate that HC mediates the relationship between ST, SP and SI and firm performance. The findings of this study offer important insights for managers of SMEs, researchers and policymakers to further understand the effects of ST, SP SI, HC and SMEs’ performance. SMEs should also be encouraged to develop their ST, SP, SI and HC to improve their performance. Finally, this study serves not only to clarify the mechanism between HC and SMEs’ performance, but also to generalize the ST, SP and SI results in the Yemen and Middle East context.

The field of strategic innovation (SI) has been garnering increasing research interest, with studies adopting and employing varying definitions and creating different methods for its measurement. Despite the innumerable studies, few have addressed manufacturing and small and medium-sized enterprises (SMEs), particularly those focused on Middle East countries, in light of the relationship between structural capital (SC) and SI. Hence, the present work is primarily aimed at examining the role of SC in SI and the performance of manufacturing SMEs. It employed the survey method to gather data from the study sample of 284 Yemeni manufacturing SMEs and the hypotheses were tested using Partial Least Squares-Structural Equation Modelling (PLS-SEM). On the basis of the results, there is a significant influence of SI on performance; SC also has a moderating role of on this relationship. The present study is expected to contribute to the creation of a measurement system for SI in SMEs, stressing each component of SI in enhancing the performance of such enterprises.