Do Small Firms Possess Innovative Behavior? Evidence from Malaysia

Abstract

The aim of this article is to describe patterns of innovative behaviors among small firms in Malaysia. The significant of this study lies in its attempt to differentiate innovation practices by small firms from the general innovation prescriptions which dominated by large firms. The underlying theoretical arguments for this study are based on Greiner Growth Model and Readiness Theory. Greiner model explains the role of innovation as a source of competitive advantage that support small firms’ growth, while Readiness Theory and slack resources concept explain about concentration of innovation types in small firms. This study employs case-study which involved in-depth structured interviews with eight small firms’ owners. The respondents are classified into two groups based on its’ owner social background. The first group consists of small firms owned by the ordinary social background owners and the second group consists of small firms owned by poor owners selected from a special economic empowerment program conducted by a government agency. The findings indicate that most small firms performed the administrative, incremental and product innovations. The administrative innovation is applied as perseverance reactions to market turbulent and dynamic. Nevertheless, small firms which are owned by poor owners have yet to adopt extensive innovative behavior due to their tight financial constraint. The originality of this study lies in its approach as well as the simultaneous emphasis on owners’ demographic characteristic effect, namely the social background, on innovative practices among particular small firms.