The performance of entrepreneurial small‐ and medium‐sized enterprises

Abstract

Innovation is an important driver of economic growth for it leads to new products and services, enhanced quality, and lower prices. In an increasingly competitive global market, innovation turns out to be essential to secure a viable competitive position. Although there is no perfect correspondence between accounting intangible assets and innovation activities, the association between these two concepts is close enough to take investment in intangible assets as a proxy for entrepreneurship and innovation. To identify differences between innovative and non‐innovative small and medium enterprises in the service industry, both descriptive and statistical analyses are performed on financial data for the period 2007–2009. The results obtained show that, although with some exceptions, innovative firms generally have better economic and financial performance than non‐innovative companies.