Abstract
Purpose This paper aims to study the influence of innovation on micro, small and medium-sized enterprises (MSME) performance in Colombia through the 403 MSMES survey analysis. In particular, this paper measures the effect of participation in R&D alliances, product innovation and process innovation on it. Design/methodology/approach MSME performance is measured through a composite index, estimated through principal components analysis using polychoric correlations, which is based on eight self-reported assessments of MSME performance. Then, this measure of performance is related to MSME participation in R&D alliances and the product and process development stance of the MSME based on an adaptation of the Miles and Snow business classification scheme, by means of an ANOVA and a linear regression. Findings Colombian SMEs are not significantly benefitted from participation on R&D alliances. Instead, their performance appears to be dependent upon their internal innovation efforts directed to product development. Moreover, the results suggest that imitators get a performance almost as high as innovators. Originality/value Innovation activities in Colombian SMEs are carried out informally, as they are mostly uninterested to engage in R&D activities and to develop new products by own initiative. Moreover, few of them have an R&D department. In regard to technology, results suggest that almost half of SMEs are classified as followers, namely, they use the same technology as competitors.
Highlights
IntroductionSmall and medium-sized enterprises (hereafter we will use the terms SME and MSME interchangeably) are key players in Colombia’s business field, as they make a big contribution to employment and output
Micro, small and medium-sized enterprises are key players in Colombia’s business field, as they make a big contribution to employment and output
Concluding remarks Results suggest that innovation activities in Colombian SMEs are carried out informally, as they are mostly uninterested to engage in R&D activities and to develop new products by own initiative
Summary
Small and medium-sized enterprises (hereafter we will use the terms SME and MSME interchangeably) are key players in Colombia’s business field, as they make a big contribution to employment and output. Recent estimates show that SMEs provide 67 per cent jobs and 28 per cent output (GDP) in Colombia (Dinero, 2016). Bell and Teima (2015) estimate that formal SMEs provide 45 per cent of jobs and produce 35 per cent of output (GDP) in emerging markets, figures that could be higher if informal sector SMEs were accounted for. The aforementioned facts together with SMEs fast adaptability to changing market conditions make them a key player in the production and distribution of wealth (Yoguel and Boscherini, 1996; Soto and Dolan, 2004). Increasing market openness, an accelerating rate of technological change, together with a loose management of knowledge assets and human capital, poor qualifications of firm owners and employees, localization and infrastructure disadvantages, all make it difficult for SMEs to prosper in highly competitive markets
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