Abstract
PURPOSE: The aim of the paper is to analyse the importance of both internal capabilities (resources) and external information sources in implementing product, process, marketing and organizational innovations aiming to maximize firm competitive advantage and create value for stakeholders. Furthermore, in particular, we examine the role of public organizations, business networks, firm size, and the industry sector, in the emergence of different types of product, process, marketing, and organizational innovations. The research was based on the typology of innovation (product, process, marketing, and organizational) adopted by the OECD. METHODOLOGY: The paper is based on data from 389 SMEs located in Finland and describes the development of a model for testing the factors that increase the innovativeness of SMEs. The logistic regression model is used as a methodology. Findings: The results show that the creation of novel products, processes and marketing innovation is connected to various external sources of information, such as fairs, the media and the internet. Moreover, the relationship between internal capabilities such as the firm’s know-how increases the marketing and organizational innovativeness of SMEs. Our results demonstrated that the creation of product innovation is positively connected to manufacturing. Furthermore, we find that the creation of novel processes and organizational innovation is related to firm size, such that firms with fewer than 20 employees (smallest firms) were concentrated among non-innovators and companies with more than 20 employees were concentrated among innovators. IMPLICATIONS FOR THEORY AND PRACTICE: The contribution of our study is to analyse to what extent various types of innovation rely on specific information sources. This study also provides suggestions for practice and policymakers. Contrary to expectations regarding our findings, public support organizations were not statistically significant in any innovation model. Therefore, public support organizations should develop better mechanisms to find SMEs with strong motivations to develop new products and market opportunities. ORIGINALITY AND VALUE: This paper provides a new and topical viewpoint for the literature by examining the possible factors explaining the increase in SMEs’ likelihood of implementing product, process, marketing, and organizational innovations. Our study provides comprehensive information on how different stakeholders contribute to the emergence of SME innovation.
Highlights
In the last few years, much attention has been given to the innovation activity of small and medium-sized enterprises (SMEs) (Jones-Evans et al, 2018; Lukovszki et al, 2020; Lecerf & Omrani, 2020)
Organizational innovations were less common since approximately 37% of all firms had made changes to the organization that could be regarded as organizational innovations
By focusing on themes associated with the importance of internal capabilities, public support organizations, business network relations and various external information sources together with a firm’s industry sector and size, the results at least partially tie well to the criteria made in previous studies
Summary
In the last few years, much attention has been given to the innovation activity of small and medium-sized enterprises (SMEs) (Jones-Evans et al, 2018; Lukovszki et al, 2020; Lecerf & Omrani, 2020). Innovation activity can be seen as a prerequisite for SMEs’ performance (Freel & Robson, 2004; Keskin, 2006; Lööf & Heshmati, 2006). Companies with fewer than five employees account for almost 90% of the number of Finnish companies (369 940 in 2019), contribute almost 12% of turnover (430 246 485 thousand €) and provide approximately 15% of employment (1 530 726) of Finnish firms in 2019 (OSF, 2021). All SMEs accounted for over half of turnover and approximately 64% of employment in Finnish firms in 2019. According to the Official Statistics of Finland (OSF, 2020), in Finland, over 60% of firms employing at least ten employees engaged in innovation activities between 2016 and 20184. 40% of industrial firms and 34% of service sector firms made product innovations or launched new or improved products in 2016-2018
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