Innovativeness of Small and Medium Enterprises in Central and Eastern Europe

Abstract

Goal – the sector of small and medium enterprises (SMEs) is considered a driving force for economic development. The literature on the subject increasingly emphasises that it is SMEs that initiate transformation of an economy as they play a crucial role in implementing innovations that make it possible to enhance its competitive success. The purpose of the article is to assess the level of innovativeness (innovative activity) of small and medium enterprises in CEE countries. Research methodology – the article contains an analysis of innovation measures and indicators, including (among others) the share of enterprises classified as innovative, the level of outlays on research and development, the number of research workers, and the number of innovations implemented by companies. The authors verified two research hypotheses: H1: The SME sector in CEE is becoming increasingly more innovative; H2: CEE countries significantly differ in terms of the level of innovativeness in their SMEs. In order to achieve our purpose and verify the research hypotheses, we use publicly available data and indicators published by Eurostat or the European Commission. The study covers EU member states located in Central and Eastern Europe: the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia. Score/result – the presented statistical data indicate that the innovativeness of small and medium enterprises in CEE countries is growing. An increasing number of SMEs can be classified as innovating companies. The firms’ own expenditure on R&D (BERD) and non-R&D innovation has also been rising. A marked increase can be observed in the number of employed scientists and R&D personnel in small and medium enterprises in CEE countries. It should be emphasised, however, that these countries vary significantly in terms of their levels of innovation in the SMEs sector. Originality/value – the review of the literature on the subject and the conducted analysis have highlighted serious problems with measuring innovation and the availability of data, particularly that regarding SMEs. On the other hand, the obtained results make it possible to identify areas of interest for future research projects. Among them, special attention is deserved by the reasons for the disparities in innovation across SMEs from CEE countries.