Management of Innovation in Small and Medium Enterprises in India: A Barrier Approach

Abstract

Small and medium enterprises (SMEs) form an integral part of Indian economy. In India, small and medium enterprises contribute about 45 percent of the gross turnover in the manufacturing sector and 40 percent of total exports. They are source of employment to large number of people and contribute significantly to growth and GDP of an economy. Small and medium enterprises in India are adopting innovative practices and technologies to sustain competitive environment. There are many small and medium enterprises in India that are innovating and using knowledge as a source of success. But 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. These barriers often act as road block for success of small and medium enterprises in India. But, it is observed that there are number of small and medium enterprises that find ways in overcoming these barriers and become innovative in the process. The present study focuses on identifying barriers that affect innovative behavior of small and medium enterprises in India. To be more specific, following research issues have been examined: understand the different barriers faced by small and medium enterprises in their innovative behavior and how small and medium enterprises overcome them? The study is an attempt to seek answer to these questions. Extensive literature review includes the concept of innovation, innovation process and barriers faced by SMEs. 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 most of the enterprises face barriers in innovating such as shortage of technical know-how, shortage of skilled manpower and high cost of innovation.