Contextual Factors Affecting the Innovation Performance of Manufacturing SMEs in Korea: A Structural Equation Modeling Approach

Ye Choi,Up Lim

doi:10.3390/su9071193

Abstract

This study empirically explores the relationship between innovation performance and the internal and contextual factors driving technological innovation in manufacturing small and medium-sized enterprises (SMEs) in metropolitan areas of Korea using structural equation modeling (SEM). Our analysis is based on firm-level data from the Korean Innovation Survey conducted by the Science and Technology Policy Institute in 2012. According to the results, SMEs’ innovation capacity was positively related to technological innovation performance, and SMEs’ skills and technology acquisition is a contextual factor that positively influences their innovation performance. In this process, SMEs’ innovation capacity is a partial mediator between skills and technology acquisition and SMEs’ technological innovation performance. Moreover, the results show that the relationship between government and public policies and SMEs’ innovation performance is mediated by SMEs’ internal innovation capacity. The results imply that both skills and technology acquisition and government and public policies are important contextual factors can increase SMEs’ innovation performance. Based on the results, this study provides implications for policy makers in terms of the policies that provide both direct and support roles in fostering and sustaining innovation, which drives regional economic growth and development.

Highlights

The manufacturing industry is the backbone of our economy and has a paramount importance in regional economic and social development
This study examined the relationships between certain contextual drivers of innovation performance and the mediation effects of small and medium-sized enterprises (SMEs)’ innovation capacity in manufacturing SMEs located in metropolitan areas of Korea
We suggest that contextual factors such as skills and technology acquisition and government and public policies are key factors fostering SMEs’ internal innovation capacity and innovativeness based on our results

Summary

Introduction

The manufacturing industry is the backbone of our economy and has a paramount importance in regional economic and social development. Many studies found convincing evidence that network cooperation or the use of a wide range of external knowledge and sources is a way to supplement and complement internal resources that could contribute to firms’ successful innovation output [14,22,57,58] This prompted the following hypotheses: Hypothesis 2a (H2a). For SMEs with a limited range of technology, acquiring external technology from universities, research institutions, governments, and firms can compensate for a limited capacity to absorb new technology This more active and greater use of technology assets provides an opportunity for SMEs to develop their innovation capabilities [64]. BBaasseedd oonn tthhee ddiissccuussssiioonn aabboovvee,, wwee pprrooppoossee tthhee hhyyppootthheessiizzeedd ccaauussaall rreellaattiioonnsshhiippss iilllluussttrraatteedd iinn tthhee rreesseeaarrcchh mmooddeell iinn FFiigguurree 22. WWee ffooccuuss oonn tthhee ccaappiittaall rreeggiioonn bbeeccaauussee mmoosstt iinndduussttrriieess aarree llooccaatteedd iinn uurrbbaann aarreeaass,, aanndd ppaarrttiiccuullaarrllyy iinn tthhee nnoorrtthhwweesstt ppaarrttss ooff KKoorreeaa tthhaatt ffoorrmm tthhee ccaappiittaall rreeggiioonn

The Measurement of the Constructs

Empirical Results

Conclusions