The significance of innovation management in triggering and sustaining increase in corporations of distinct size, age or enterprise type, is receiving growing attention, yet scant empirical research have been carried out in project-oriented service firms, in particular small-scaled enterprises. This study aims to identify how innovation management in small construction firms could enable them to pursue innovation and achieve greater business performance. Data collection comprises 157 empirical surveys leading to a conceptual framework modelled using the structural equation modelling approach. The findings show that entrepreneurship and networking have a direct and considerable influence on both technological and non-technological innovation, which consequently improves firm performance.