Role of management education in developing capacity for innovation in small firms

Abstract

The capacity of small firms for developing and applying innovations in products, processes and organisation has long been a major driver of national and EU public policies in support of small and medium enterprises (SMEs). Generally, support for the innovative SME has been nested within a wider policy thrust to promote SME growth and, as a consequence, overall economic growth and competitiveness. Unfortunately, initiatives to develop the capacity for innovation among SMEs and the growth potential of innovative SMEs have tended to be overshadowed by programmes aimed at job-creation and at boosting the counter-unemployment potential of SMEs. However, it is clear that only a minority of SMEs have a strong growth motivation or the management capacity for growth and innovation. Taking growth-oriented firms as proxy for those with high potential for innovation, studies conducted by the Open University Business School (OUBS) suggest that the capacity for innovation in SMEs is strongly linked to strong formal management development policies within small firms. Indeed, the second Community Innovation Survey across the EU reveals that management issues concerned with organisational rigidities, staff development and information management are perceived as the strongest barriers to innovation; more important than exogenous factors such as economic risk, market demand or even lack of finance (though, arguably, this too reflects managerial ability). The importance of management and staff development to the development of an effective capacity to innovate and apply innovations has also been confirmed by recent studies in Britain. This article examines the role of management education in developing the innovative potential of SMEs through an analysis of:(1) the growth SMEs in a recent wider management development study conducted by the OUBS, (2) appropriate quarterly surveys conducted the Small Business Research Trust and (3) the patterns of continuing professional development expectations of MBA graduates (including some of the 7,000 or so OUBS MBA alumni). This will also serve to evaluate the role that business schools might play in developing SMEs' capacity for innovation.