A counting multidimensional innovation index for SMEs

Nuno Campos Pereira,Leonardo Costa,Nuno Araújo

doi:10.1108/bij-06-2016-0090

Nuno Campos Pereira, Leonardo Costa + Show 1 more

Open Access

https://doi.org/10.1108/bij-06-2016-0090

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Abstract

PurposeThe purpose of this paper is to develop a multidimensional innovation index (MII) framework for measuring and benchmarking multidimensional innovation of small and medium enterprises (SMEs) and groups of SMEs.Design/methodology/approachA counting dual cut-off method is employed. First, output and input innovation profiles and composite scores of individual SMEs are computed. Second, a set of four composite innovation indices are generated characterizing the group of SMEs under analysis: MIIo and MIIi measure multidimensional output and input innovation, respectively; while MIIr and MIIa assess the ratio and average of MIIo and MIIi, respectively. To test the MII framework, a survey was conducted among SMEs of the metalworking industry in Portugal.FindingsIn 2012, about 28.9 percent (42.2 percent) SMEs of the Portuguese metalworking industry were determined to be multidimensional output (input) innovative. The average percentage of dimensions for which output (input) innovative SMEs were innovative was 65.0 percent (66.0 percent). Thus, the industry MII vector was (MIIo; MIIi; MIIr; MIIa)=(0.188, 0.279, 0.674; 0.233). Significant differences were found across the industry, individual SMEs’ multidimensional output and input innovation scores, enabling the identification of groups of SMEs, which can be characterized and compared by computing the corresponding and specific MII vectors.Research limitations/implicationsThe research has limitations because of the small size of the sample and the benchmarking possibilities it provides.Originality/valueThe novelty of the MII framework lies in the counting dual cut-off method employed.

Highlights

In the European Union, small and medium enterprises (SMEs) are firms employing 10 to 249 employees, which have an annual turnover or an annual balance sheet not exceeding, respectively, €50 million and €43 million (European Commission, 2016).This research was motivated by several factors, including the importance attached to innovation in the literature; the role of SMEs as major sources of innovation; the need to characterize the innovation of industries dominated by SMEs, such as the metalworking industry in Portugal; and the difficulties in gathering information on SMEs
We follow innovation definitions stipulated by the Organisation for Economic Cooperation and Development (OECD) Oslo Manual (OECD, 2005) and build 20 individual indicators of innovation, adapting suggestions from this Manual and/or individual indicators appearing in the European Innovation Scoreboard (EIS) (Hollanders et al, 2016) and the Global Innovation Index (GII) (Dutta et al, 2016)
Relative to other frameworks, such as, for instance, the EIS and the GII, a first distinctive factor of the multidimensional innovation index (MII) is that the information collected is strictly SME based

Summary

Introduction

In the European Union, small and medium enterprises (SMEs) are firms employing 10 to 249 employees, which have an annual turnover or an annual balance sheet not exceeding, respectively, €50 million and €43 million (European Commission, 2016). These theories establish the concept of innovation and its relationship with productivity, describe the links between innovation and firm size, discuss the explanatory power of patents, characterize the existence of radical and incremental innovations and of closed innovations (CIs) and open innovations (OIs), identify the territories in which innovation occurs, and many other aspects They justify the choice of the 20 individual indicators used in the MII framework, and the variables that can be considered ex post to explain differences in innovation across SMEs. The concept of innovation This research adopts the OECD Oslo Manual’s definition of innovation. To compute the Summary Innovation Index, the measurement framework used in the EIS distinguishes 25 individual indicators, which are classified into three types (and eight dimensions): enablers (human resources, open excellent research systems, finance and support); firm activities (firm investments, linkages and entrepreneurship, intellectual assets); and outputs (innovators, economic effects). Product and/or process innovations (16.67%) Number of workers (16.67%) PCT patents (16.67%)

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Findings

Conclusions