<![CDATA[Small and Medium-sized Enterprises (SMEs) play a vital role in economic development in emerging economies. However, limited resources, informal labor arrangements, and institutional uncertainty frequently constrain their capacity for innovation. In such settings, innovation tends to emerge through adaptive organizational practices rather than formal Research and development. This study examines how work–life balance (WLB), employee engagement (EE), and job insecurity (JI) shape employee performance, with job satisfaction (JS) conceptualized as a coordination mechanism linking individual behavior to organizational outcomes. Grounded in evolutionary and institutional perspectives as well as the Job Demands–Resources framework, this study employs a quantitative explanatory design using survey data from 200 employees in East Java, Indonesia. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that employee engagement is the strongest predictor of performance, exerting both direct effects and indirect effects through job satisfaction. Work–life balance positively affects performance but does not significantly influence job satisfaction, indicating its role as an efficiency-oriented organizational practice. Job insecurity substantially reduces performance, while its relationship with job satisfaction is not significant, reflecting the normalization of employment instability in informal labor markets. Job satisfaction partially mediates the relationship between engagement and performance. This study demonstrates how micro-level labor conditions contribute to organizational innovation, productivity, and adaptive efficiency in resource-constrained SMEs.]]>
