Distinguishing Sectoral Innovation Behaviour: A Study of SMEs in India

Abstract

Small and medium enterprises (SMEs) are regarded as the main source of entrepreneurship and innovation. These enterprises provide employment to large number of people and contribute significantly to growth and GDP of an economy. In the world economy, knowledge as a determinant of competitive advantage is gradually replacing traditional factors of production like labor and capital. In order to survive and compete in the globalized market, small and medium enterprises need to use knowledge to innovate. In India, small and medium enterprises contribute about 45 percent of the gross turnover in the manufacturing sector and 40 percent of total exports. These small-scale enterprises however lose out to the big enterprises in terms of financial sustainability, range of products, marketing clout, brand and bargaining power. At the same time, it is observed that there are number of small and medium enterprises which are growing and becoming competitive in different sectors. The present study focuses on distinguishing sectoral innovation behavior of small and medium enterprises in India. To be more specific, following issues are examined: How are SMEs in India in selected sectors differ in adopting innovative practices? How they manage their innovation behavior? Extensive literature review includes the concept of innovation, innovation process, management of innovation and overview of innovation in selected sectors. Different government, private associations are approached for data collection. The study is conducted on four sectors: Automotive Component, Textile (Garment manufacturing), Pharmaceutical and Information Technology. The result shows that the enterprises in selected sectors are involved in the improvements depending on the nature of sector, product, cost and demand of that product in the market.