Management of innovation projects in SMEs in the Czech Republic

Abstract

IntroductionThere is a pending question whether SMEs can use routinely some of sophisticated approaches like Monte Carlo analysis (MC), Stage Gate Control Process (SGCP), or Post implementation review (PIR) which might seem to be demanding for staff skills, training, managing or funding. It has become apparent that in SMEs these activities are not prevalently used on daily basis [Frank & Roessl 2015]. Hardly can the company set up a dedicated team which would be in charge of permanent observation and control of these activities. The point is that these approaches should be in some extent simplified so as to be easily adopted by SME's company staff. Till now, there has been only a partial adaptation (e.g. in small food business [Howieson, Lawley & Selen 2014]) for the decision support concerning innovation project contribution for firm's value creating in the SME's segment. To fill this gap it was necessary to develop implementation models for the application of aforementioned methods which would be instructive enough and easily implemented and operated in SMEs. Research question to be raised in this respect is whether SMEs can easily master any of these methods under strictly confined conditions which are typical for SMEs and make them efficient company value drivers.Such implementation models have been developed in University of Economics in Prague over several past years. Moreover all implementation models had to be tested and validated on innovation projects taken from industrial practice. These real case studies illustrating the topics are described in this paper.1. Innovations and its impact on company value creationAccording to Drucker any company has just two sources for growth - marketing and innovations [Drucker 2008]. Moreover Pitman [2003] proved that long-lasting company value growth was still by far the best indicator of quality of company performance. Exploration of the impact of innovation on company growth is still in spotlight for many researches. Manez et al. [2013] as well as Rochina-Barrachina et al. [2010] examined the effect of process innovation on productivity growth with the emphasis on differences in company size. They concluded that innovation boosted company productivity no matter what company size was. For small firms the productivity growth was only temporary while for large firms the growth was long-lasting. The reason is that the innovation processes in small firms are rather incremental and easy to imitate while innovation processes in large firms are preferably of radical character and therefore unique. Similarly large companies introduce more complex processes dedicated to innovations that have become common knowledge with a longer delay. Rosenbusch, Brinckmann & Bausch [2011] examined relationships between innovation and company performance and found out that this relationship was ambiguous and depended on the context. Factors such as the age of the firm, the type of innovation and the cultural context affected the impact of innovation on firm performance to significantly larger extent [Ates, Garengo, Cocca & Bititci 2013].Winning competitive advantage is usually considered one of basic strategic goals which enables company to outplay competitors and generate value for shareholders. Any company has to possess dynamic capabilities which include difficult-to-replicate enterprise capabilities. These capabilities are required to adapt the company to changing customer and technological opportunities [Teece 2007]. One of the most significant capability is company ability to innovate. Strategic innovation consists of four different processes that are already challenging on their own: (1) strategising, (2) entrepreneuring, (3) changing, (4) investing. Managers must think of the entire process, from idea generation and managing the renewal process up to the successful implementation of the innovation [de Witt & Meyer 2014, pp. 437-440]. For the innovation to be a customer value generator is essential to be properly designed and timely launched. …