Abstract
Innovation is not just an individual act of learning by a firm or entrepreneur, but anchored within a larger system that enables and draws on the innovation process. Hence there is need to study internal and external factors that influence technological innovation outputs of small and medium enterprises (SMEs). SMEs at four industrial estates in Nigeria were sampled for this study. Several internal factors such as firm size, turnover, age, ownership, and expenditure on innovation activities did not have significant relationships with innovation output, signifying they are not the factors promoting innovation levels. Quality of human resources and interactions with suppliers as an external factor within the national innovation system (NIS) both made significant impact on innovation. Innovative performance of the firms is mainly influenced by demand or market pull factors more than technology push sources. The study recommends increasing interaction and dynamism within the NIS; substantial investment to galvanize industrial and technological capabilities of the firms and their supply chains; and adequate supply of infrastructure and funds to SMEs.
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