Study of the Obstacles and Motivational Factors of Innovation in SMEs

Abstract

Today, small and medium enterprises – in terms of their own advantages and characteristics, as well as their contribution to job creation – deserve to play an important role in the economy. A glance at the industrial economy in many developed countries and the newly industrialized world shows that support of small and medium enterprises is one of the main priorities of the economic development programs of their countries. These firms, despite the reduced need for investment, have greater economic efficiency and also play an important role in preparing for innovation and job creation. In different countries of the world small and medium enterprises are very similar and they are defined mainly based on quantitative criteria, such as the number of employees or turnover rates. The European Union defines firms with 1 to 9 employees as micro sized enterprises, those with 10 to 49 employees as small sized enterprises and those with 50 to 249 employees as medium sized enterprises. In addition, their annual turnover respectively must be less than 2 and 10 and 50 million euro (The European commission). The development of science and technology, globalization and increasing competitive approaches influence the performance of enterprises, and business environments increasingly are dynamic, complex and unpredictable. Because of these changes, many companies are looking for new ways to conduct their business to create the most value. Not only is the need for change not detrimental but it can also create opportunities that enterprises must seek to exploit. What is important is the innovation of a firm compared to that of its rivals. Achieving effective innovation is complex work. The ability of SMEs to meet the needs of customers mainly depends on their capacity to innovate and offer new products with competitive prices. Innovation is an important stimulus to have a sustainable competitive advantage and also one of the challenges of small and medium enterprises (O’Regan et al. 2006). It is important to know that small and medium enterprises are not smaller versions of large firms. Their needs and decision making processes are significantly different and small firms also usually grow faster than large firms (Humphreys et al. 2005).