Innovation In Small Firms Research Articles

The process of innovation in small manufacturing firms

Time compression new product development processes (NPDP) are viewed as the current best practice models for NPDP. We describe the concepts that are inherent in these models and consider their efficacy with respect to small and medium sized enterprises (SMEs). We present preliminary data from a grounded theoretical study of the NPDP in six SMEs. This indicates that these organisations use NPDPs differently to those in the literature.

The Importance of Research and Development for Innovation in Small and Large Canadian Manufacturing Firms

The debate over the appropriate function of government policy for RD they each have their own advantages. Small firms are more flexible but can suffer from cost disadvantages due to scale. They overcome their disadvantages by networking with their customers and by showing the same flexibility in their R&D process that they exhibit elsewhere. They rely less on dedicated R&D facilities and more on the flexible exploitation of R&D as opportunities arise. They also network with customers in order to adopt their suggestions for new innovations.

Mass Production Without the Factory: Craft Producers, Guns and Small Firm Innovation, 1790–18151

Recent attempts to redefine the role of small firms as dynamic initiators of change in production processes run counter to the conventional narratives on the growth of the factory. These narratives can be properly located within a mid-nineteenth century debate on social and political structures, in which the workshop was equated with craft restriction, low quality of output and moral laxity on the part of the workforce. The force of the contemporary discourse has obscured the capacity to innovate that was evident in the small firm in the early stages of industrialisation. This can be explored through a case study of the Birmingham gun trade. In the 1850s the low level of mechanisation used in the production of the Birmingham gun was ’exposed’ as being in sharp contrast to the factory production of guns with interchangeable parts in the United States. Craft control in Birmingham was identified at the time as the significant factor, though Habbakuk has subsequently drawn attention to differences in the labour supply in the two countries. In fact, low levels of technical application in the case of Birmingham are better explained by reference to the procurement policies of successive British governments. These debates, amongst contemporaries and historians, have served to obscure the very flexible way in which custom was ’re-negotiated’ in the small firms making gun components, to achieve dramatic increases in productivity during the French Wars.

Mapping Innovation Networks

This paper outlines a detailed and systematic method for revealing and mapping out the network mobilised in the development of a discrete innovation. This is termed a focal action-set. Important to the utility of this approach has been the development of a set of conventions for the graphical expression of the network and its components: actors, links and flows. It is argued that the network graphic provides a powerful, though under-utilised, tool for the representation of relational data. It may be employed, for example, to reveal variations in network configuration and to highlight key networking or boundary-spanning actors. The network mapping approach is illustrated through three cases of small firm innovation drawn from a wider investigation of award-winning technological innovations. A comparison between the network maps show a variation in the key boundary-spanning interactions, which is related to the organisational background of the entrepreneurial actor.

Relative Strengths and Weaknesses of Small Firms in Innovation

Relative Strengths and Weaknesses of Small Firms in Innovation

Innovation and networking amongst small manufacturing firms in Cyprus

The practice of innovation management in Cyprus is investigated via case studies of innovative small manufacturing firms. The analysis concentrates on how Cypriot firms develop networks (or avoid them!) and the effects of network relationships on innovation performance. The behaviour of firms is related to two contrasting models of network development: First, the “local strategic network model” where firms intentionally develop and maintain a network of long‐term relationships based on trust, cooperation and mutual benefit, with a view to obtaining the necessary resources and knowledge for innovation. Second, the “local self sufficiency model” where firms obtain any required resources from other local firms through ‘arms length’ market based transactions and any technical knowledge primarily from foreign suppliers. Such firms follow an insular pattern of behaviour in order to protect their independence and innovative activities. The possible association between performance (in terms of profitability, sales growth) and innovation strategies of Cypriot firms is examined and the implications for business managers and for Government support programmes are drawn out.

Academic-industry linkages and small firm innovation: evidence from the scientific instruments sector

This paper explores the role of academic linkages in the product development efforts of small and medium-sized manufacturing firms (SMFs). Data from a sample of 204 SMFs in New York State's scientific instruments sector suggest that university research units can play a helpful role in small firm innovation. Knowledge spillovers from the academic sector are shown to be geographically localized. A key finding is that the intensity of academic-SMF interaction varies inversely with the time-distance that separates firms from major campuses. A related finding is that innovation rates are higher among SMFs that enjoy close proximity to academic resources. The paper concludes with a brief discussion of the role of micro-geographical factors in regional knowledge diffusion.

Evolution, innovation and learning: evidence from case studies

Whilst considerable work has addressed the characteristics of innovative small firms and their aggregate contribution to economic growth and development, the internal processes of learning and innovation have remained relatively neglected. Drawing upon evolutionary ideas within economics and the broader social sciences, this paper begins the development of an appropriate process theory of learning within innovative small firms. The theory conceptualizes; the skills of the firm in terms of organizational routines. These routines are subject to self–reinforcing, path–dependent development which result in the tendency towards lock–in within product innovative small firms. Amongst other things suggested by the paper are the need to augment the knowledge bases of technically driven firms and the need for training policy differentiation between product innovative small firms and their more mainstream counterparts.

Employment Creation in Small Technological and Design Innovators in the UK During the 1980s

This paper provides rare empirical evidence on employment creation by innovative small firms in the U.K. over the eleven years between 1980 and 1991. Drawing on a database of firms which were recognised as having introduced important innovations, the paper examines the extent of employment growth in these companies and compares their growth with that discovered by other studies of small firms in the U.K. This shows that the innovative firms have grown at a significantly faster average rate than small firms generally. Some of the factors associated with employment change in small firms are assessed. This shows that the initial size, age, sector of activity and type of innovation introduced by the firms were all associated with differences in their average rate of growth. The employment created was, however, highly concentrated in a few firms, but even the fastest growing of these companies (directly) created hundreds rather than thousands of new jobs over the period of analysis.

Conceptualising the learning dimension of innovation in small firms: arguments for an ‘institutional’ approach

Conceptualising the learning dimension of innovation in small firms: arguments for an ‘institutional’ approach

Process innovation in small firms: Case studies on CNC machine tools

This paper reports the results of a study on the implementation of process innovations, and the benefits thereof, in a sample of small metalworking firms in a mid-Atlantic region of the US. No firm experienced serious organizational or technical problems in making substantial investments in CNC technologies and implementing them effectively. One reason for this discrepancy may be that the firms that were interviewed have had prior experience with CNC. The most compelling reason for introducing process innovations was the pressure exerted by large sophisticated customers with whom the interviewed firms have had long-term relationships. The implication is that government policies aiming at assisting small manufacturers to modernize should not overlook the strong ‘pull’ effect of the markets targeted by these manufacturers.

Product Innovation and Small Business Growth: A Comparison of the Strategies of German, U.K. and Irish Companies

Innovation in small firms is important both because of its direct contribution to the competitiveness of those companies but also because of the potential for the small firm sector to act as the initiator, catalyst and medium for wider technical change. In this paper data from the Product Development Survey, a new international survey of firms' product innovation activity and strategy, is used to examine the relationship between product innovation and growth in German, Irish and U.K. small firms. In each country the output of innovative small firms was found to grow significantly faster than that of non-innovators. In Germany, output growth was achieved by a product innovation strategy which sharply increased productivity but reduced employment. U.K. and Irish small firms adopted a more balanced approach with increases in both employment and productivity associated with innovative behaviour. Comparison of the organisation of product innovation indicated that German small firms adopted a less market-oriented, less risky, and more formally organised approach than their U.K. and Irish counterparts. The revealed characteristics of U.K. and Irish small firms suggested that they may be the most effective initiators and catalysts for wider technological change. The larger proportion of German small firms which were innovating, however, suggested that the German small firm sector may be the more effective technology transfer medium.

Some new evidence on the determinants of large- and small-firm innovation

Empirical analyses presented by Acs and Audretsch suggest differences in the market structure determinants of innovation between large and small firms in U.S. manufacturing. The evidence they offer is ambiguous. By using data for a different country (The Netherlands), a different measure of innovation and a different aggregation level, we offer new evidence, allowing a revaluation of the findings for the U.S. material. Moreover, the influence of the market structure determinants does not appear to differ between a period of sluggish growth (1983) and one of relatively high growth (1989).

Union membership, market structure, and the innovation output of large and small firms

The determinants of the extent of union membership, industry concentration, and the innovation output of large firms and small firms are examined in a simultaneous-equations model. Data for 246 U.S. manufacturing industries are used to determine: (1) that there are significant interdependencies among these endogenous variables; (2) that contrary to recent findings, unionization is significantly lower in industries with high concentration and high innovation output; and (3) that although high unionization modestly reduces small-firm innovation output (as compared with large-firm innovation output), there is not a large difference in the effects of small-firm and large-firm innovation output on the extent of union membership across industries.

Analyzing literature-based innovation output indicators: the Italian experience

This paper presents the results of a study on the product innovations introduced in the Italian market in 1989 and reported in a selected number of trade journals. The analysis of data collected by means of this literature-based counting procedure confirms that R&D oriented industries and large firms do not in Italy have a marked competitive advantage in innovation. The country appears to be instead characterized by a significant presence of consumer goods industries and small firms in innovation. Our data indicate a statistically significant association between trade competitiveness and strength in product innovation, and show the comparatively higher capacity for product innovation of some of the industries in which Italy achieves a positive performance in international trade. Moreover, the presence of spillovers at the regional level from both private and public R&D expenditures proves to be positively correlated with the development of product innovations. Finally, small firms with fewer than 50 employees appear to be more innovative than is usually believed to be the case.

Firms size and R&D spillovers: Evidence from Italy

The recent emergence in the industrial organization literature of a wave of studies identifying small firms as more innovative than their larger counterparts poses something of a paradox? Where do small firms get their knowledge generating inputs? The purpose of this paper is to link innovative inputs to innovative outputs. This enables the identification of the extent to which spillovers exist from major sources generating new economic knowledge, such as the research and development (R&D) laboratories of private and public firms, as well as universities, to the innovative activity of large and small enterprises. Based on twenty Italian regions over a period of nine years, the emprical evidence suggests that, while firm R&D expenditures contribute to the generation of innovative output for all firms, as well as for large and small firms, the spillovers from university research are apparently more important for small-firm innovation than for large-firm innovation.

The Economic Performance of Innovative Small Firms in the South East Region and Elsewhere in the UK

THWAITES A. and WYNARCZYK P. (1996) The economic performance of innovative small firms in the South East region and elsewhere in the UK, Reg. Studies 30, 135–149. The paper explores the contribution of innovative small firms to local economic performance in different regional environments in the UK. The empirical analysis is based on a sample of small independent firms listed on the SPRU Innovation Database 1975–83. It uses detailed financial and other data on each firm to examine their performance in different operational environments. The results suggest that the average innovative SME exhibits many of the characteristics of a fast growth firm. However, the modus operandi of enterprise appears to differ between firms located in the South East region and other parts of the UK and these differences lead to variable outcomes in terms of employment, asset and export growth. THWAITES A. et WYNARCZYK P. (1996) La performance economique des petites entreprises innovatrices situees dans la region ‘Sud-est’ et d...

Symposium on Harrison's ?Lean and Mean?: A technological perspective

is beautiful" hypothesis. Increasingly, he sees industrial activity as being performed within international networks of organizations led by large firms. Some of these networks involve simple vertical relationships in which large firms subcontract less advanced technological functions to smaller firms. The "Lean" part of the title reflects the recent tendency of many large firms to pare down by subcontracting to smaller firms functions they previously performed themselves. Other networks Harrison considers, such as Silicon Valley and the Italian industrial districts, involve horizontal as well as vertical relations among innovative small firms. Harrison sees these networks as increasingly being coordinated by large firms through various types of alliances and ownership relations. In Harrison's world, the large firms are the key drivers of technological change. The "Mean" part of the title reflects Harrison's portrayal of small firms. He depicts them as increasingly the repository of society's economic dregs the low-skilled, poorly paid, and transiently employed. Advocates of small firms, on the other hand, perceive small firms as an important source of vitality in developed countries. They argue that in many industries, small firms are more efficient at innovation than large firms. Consistent with this, they contend that in recent years the preponderance of new jobs in developed economies have

Distribution of growth rates in highly successful Swedish technical innovations

This study concerns gestation times (time between patent application and market introduction) and post-market introduction growth rates of 90 highly successful Swedish technical innovations. Innovations in small firms (1–49 employees) are characterized by short gestation times and high growth rates. Those in medium-sized firms (50–499 employees) show intermediate gestation times and relatively low growth rates. Innovations in large firms belonging to the Wallenberg sphere of influence show long gestation times and high growth rates (an unexpected result), in contrast to those in other large Swedish firms, which are characterized by intermediate gestation times and relatively low growth rates. The assumption that the distribution of innovation growth rates in all the firms can be interpreted as being log normal with a Pareto inverse power tail for the very high growth rates is compatible with the data. Innovations in the small firms and in the Wallenberg firms are overrepresented in the Pareto inverse power tail portion of the distribution. These results are both unexpected and significant.

Knowledge complementarity and innovation

This paper uses an innovation production fi.mc- tion to relate the presence of geographically-mediated com- plementary knowledge resources to the innovative activity of small and large firms. The empirical results suggest that small firm innovation appears to benefit from the presence of external institutions and resources. Although large firm innovative activity benefits from the presence of knowledge resources, location appears to be especially beneficial to small firm innovative activity.