Innovation In Small And Medium-sized Enterprises Research Articles

Digital transformation and firm performance in innovative SMEs: The mediating role of business model innovation

This study investigates the consequences of digital transformation (DT) over performance in the case of innovative Small and Medium-sized Enterprises (SMEs). SMEs represent a heterogeneous kind of company in terms of capabilities. By focusing on their innovative character as a boundary condition, we increase our understanding of this relationship. We further research the mediating role of business model innovation (BMI) in the relationship between DT and performance. A sample of 434 innovative Spanish SMEs is used to test the research model through Partial Least Squares Structural Equation Modelling (PLS-SEM). We find that BMI partially mediates the positive relationship between DT and performance. This finding extends our understanding of BMI as an alignment tool and a blueprint for innovative SMEs channeling their investments in DT towards the improvement of performance. Finally, we put forward managerial implications and propose future avenues of research.

The Impact of Organizational Culture on the Innovation and Performance of SMEs: A Comparative Study between Germany and Thailand

Innovation is recognized as one of the key factors for economic growth and building a competitive advantage for small and medium-sized enterprises (SMEs) in today’s world. The purpose of this research is to investigate how innovation is related to organizational culture and performance of SMEs located in Germany and Thailand. Based on an extensive literature review, the authors propose a comprehensive research model that integrates the competing values framework, organizational innovation and the balanced scorecard framework. Data from 213 respondents across both countries were collected and analyzed utilizing structural equation modelling. Results show that despite their contrasting national cultures, adhocracy culture is a key driver of organizational innovation in both countries, leading to enhanced overall organizational performance, particularly in financial and customer dimensions. This study enriches organizational behaviour research with unique cross-cultural perspectives and equips leaders of SMEs with practical strategies for cultivating an adhocracy culture across diverse cultural landscapes.

Development Problems and New Paths of Small and Medium-Sized Enterprises under the Background of Digital Economy

This research explores the transformative impact of the digital economy on small and medium-sized enterprises (SMEs) within the global landscape. In response to the digitalization of the economy, SMEs face both opportunities and challenges that significantly shape their development. The study delves into the positive impact of the digital economy on SMEs, emphasizing the role of internet-based technologies in expanding market access, breaking down trade barriers, and restructuring supply chains. However, it also highlights cybersecurity challenges that SMEs encounter, particularly in the context of increased digitalization and the COVID-19 pandemic. The article further investigates how the digital economy fosters innovation for SMEs, enabling them to contribute significantly to radical advancements and non-technological innovation. The research underscores the symbiotic relationship between digital technologies and SMEs' innovative capabilities, emphasizing their role as catalysts for economic growth. Additionally, the study explores how the digital economy helps SMEs optimize their cost structures, achieve revenue growth, and gain access to new markets through digitalization. The article provides a comprehensive analysis of the multifaceted relationship between SMEs and the digital economy, drawing perspectives from market dynamics, cybersecurity challenges, innovation landscapes, and financial optimization. The findings contribute valuable insights for policymakers, business leaders, and stakeholders, advocating for enhanced cybersecurity measures, digital technology adoption, and strategic innovation to foster a resilient and thriving ecosystem for SMEs in the digital age. The article concludes with recommendations for bridging the digital divide, enhancing cybersecurity measures, and promoting digital transformation among SMEs in an adaptive manner.

ALWAYS DESIRE MORE? CEO PERCEPTIONS OF RELATIVE COMPENSATION, RISK PROPENSITY, AND INNOVATION IN SMEs

We study how the chief executive officers (CEOs) compensation perceptions and risk propensity influence exploratory innovation in small- and medium-sized enterprises (SMEs). Based on survey data collected from 381 CEOs of private SMEs in Colombia, we find that (1) CEO underpayment perceptions have a positively increasing relationship with exploratory innovation, (2) CEO overpayment perceptions have a positively decreasing relationship with exploratory innovation, and (3) CEOs’ risk propensity does not moderate these relationships. Our study informs small business managers, boards of directors, and policy makers on how compensation aspirations and comparisons serve as motives for exploratory behaviour. Our study also represents a unique attempt to capture CEOs’ perceptions of their compensation and explore their influence on strategic outcomes. Further, we underscore the need to extend social comparison theories to better understand how CEOs’ compensation and dispositional motives shape firms.

Perceived barriers to implementing building information modeling in Iranian Small and Medium-Sized Enterprises (SMEs): a Delphi survey of construction experts

ABSTRACT Building information modeling (BIM) is a disruptive information technology tool in the construction sector. Although this technology had a significant impact on the manufacturing industries, it, like any other technology, encountered several challenges when applied to the construction sector. Conversely, small and medium-sized enterprises (SMEs) in developing economies often face significant impediments when using innovative technologies. Thus, this paper seeks to determine and investigate the perceived barriers to applying BIM in construction SMEs based in Iran. Three rounds of Delphi surveys were carried out with 15 BIM experts engaged in construction SMEs to identify the key barriers to BIM implementation in SMEs. An empirical survey questionnaire comprising these identified barriers was subsequently designed and disseminated to the invited experts. Altogether, 56 valid survey responses were received and analyzed. The study’s findings revealed SMEs management’s hesitancy to adopt BIM, stakeholders’ reluctance to change their established methods, and a lack of technical understanding as the critical impediments to BIM adoption in construction SMEs. Also, the study identified four barrier dimensions – technology, legal, management, and financial. These BIM implementation barrier dimensions can be employed to better allocate resources and financing for BIM deployment and construction innovation in SMEs. The study will assist major project stakeholders and SMEs make better-informed BIM adoption decisions, particularly in developing nations like Iran.

The Impact of Innovation on Business Development. The Example of Moderate Innovators and the Visegrad Group Countries

The paper analyzes the relationship between innovation dimensions, according to the European Innovation Scoreboard, and the entrepreneurship rate in a group of moderate innovator countries. Using the Pearson linear correlation, the author conducted a data analysis based on an empirical study using open data from the Summary Innovation Index – European Innovation Scoreboard (SII‑EIS) and Eurostat for 2013–2019. This period covers the moment when all the countries of the Visegrad Group (i.e., the Czech Republic, Hungary, Poland, and Slovakia – the V4) were classified into the same innovation group according to EIS. However, due to the volume limitations of the article, it was decided that Moderate Innovators from 2019 would be included in the comparative analysis, i.e., when the V4 were last collectively classified as Moderate Innovators. The results of the research positively verify the initial research hypothesis that the EIS indicators show a different strength of relationships with the entrepreneurship rate in the V4 and among other economies classified as Moderate Innovators (according to SII–2020). The variables that describe the quantity and quality of entrepreneurs’ innovations strongly and positively impact the V4 countries’ entrepreneurship rate. In other countries, the variables derived from the investment attractiveness of economies show a significant and positive correlation with the entrepreneurship rate. Based on the analysis of the results, it can be concluded that there is a strong positive correlation between the entrepreneurship rate and the total innovation index, which is compiled each year based on a set of variables for the European Union countries. The study showed that the entrepreneurship rate in these countries is strongly impacted by indicators representing the following groups: Innovators (small and medium‑sized enterprises (SMEs) with product or process innovations; SMEs with marketing or organizational innovations and SMEs innovating in‑house), Attractive research systems (international scientific co‑publications), Finance and support (Venture capital expenditures), Firm investments (Enterprises that provide training to develop or upgrade their personnel’s ICT skills), and Linkages (Innovative SMEs that collaborate with others). The impact of these factors on the development of entrepreneurship in the V4 means that pro‑innovative activities undertaken in operating enterprises strongly correlate with deciding to start one’s own business. Therefore, it can be concluded that entrepreneurship in these countries has an entirely different development basis than in other countries that are Moderate Innovators, where the factors mentioned above were irrelevant.

Always on par? How small- and medium-sized enterprises manage coopetition strategies to innovate with large firms

This article explores how entrepreneurial small- and medium-sized enterprises (SMEs) manage coopetition strategies to innovate with large firms. While coopetition offers opportunities for innovation and growth, asymmetries between SMEs and large firms can provoke unilateral actions, opportunistic tactics, and knowledge theft which can undermine SME innovation power and jeopardise coopetition success. Based on a qualitative multiple-case study of 25 coopetitive innovation projects, each involving an SME and a large firm, we find that SMEs manage these risks by pursuing a synergistic mix of three distinct coopetition strategies: (1) Co-distribution, (2) Technology licensing, and (3) R&D co-development. In each strategy, SMEs navigate different coopetition intensities by dynamically combining the principles of separation, integration, co-management and co-ownership to achieve specific innovation outcomes. Our findings suggest that SMEs shift between cooperation- and competition-dominant strategies and employ a mix of management principles to offset asymmetrical risks and maximise their innovation benefits from coopetition with large firms.

Can fintech promote SME innovation?

ABSTRACT Our study investigates the role of financial technology (fintech) in fostering innovation in small and medium-sized enterprises (SMEs). Analyzing data from China’s Growth Enterprise Market (2010–2021), we discovered that fintech notably enhances innovation in SMEs, particularly by reducing financing constraints. The impact is more significant in the eastern region and for non-state-owned SMEs. Thus, advancing fintech development is key to boosting SME innovation and promoting national innovation.

The relationship between humble leadership and employee innovative behavior in Chinese Intangible Cultural Heritage (CICH) SMEs: Mediated-moderating effect of knowledge sharing and absorptive capacity

This research focuses on small and medium-sized enterprises (SMEs) within China's intangible cultural heritage (CICH) sector and investigates the relationships between employee innovative behavior (EIB), humble leadership (HL), knowledge sharing (KS) and absorptive capacity (AC). It examines how knowledge sharing, as a mediator, impacts EIB, considering the moderating role of AC. This study aims to address the knowledge gap regarding how leadership and knowledge management processes affect individual-level outcomes, such as creative behavior and problem-solving skills. This research is especially vital for the CICH sector in China, as it offers the first systematic exploration of employee innovative behavior in this area. By providing evidence-based management strategies, the study contributes to both theoretical understanding and practical application, supporting the innovation, sustainable growth, and international competitiveness of CICH SMEs. It also offers policymakers empirical insights to nurture the sector, ensuring the preservation and evolution of China's intangible cultural heritage.

Driving frugal innovation in SMEs: how sustainable leadership, knowledge sources and information credibility make a difference.

This study investigates the driving factors behind frugal innovation in Small and Medium-sized Enterprises (SMEs). It specifically examines sustainable leadership as an independent variable, considering its impact on frugal innovation, with sources of knowledge mediating this relationship and information credibility moderating the effects. Employing a Partial Least Squares Structural Equation Modeling (PLS-SEM) approach, data were gathered from 325 employees of SMEs in Pakistan. This methodology was chosen for its ability to handle complex relationships between multiple variables simultaneously, offering robust insights into the interplay among sustainable leadership, sources of knowledge, information credibility, and frugal innovation. The results reveal significant associations between sustainable leadership, sources of knowledge, information credibility, and frugal innovation. Sustainable leadership demonstrates a substantial influence on both sources of knowledge and frugal innovation. Furthermore, sources of knowledge play a vital role in mediating the relationship between sustainable leadership and frugal innovation. Information credibility emerges as a significant moderator, affecting the pathways between sustainable leadership, sources of knowledge, and frugal innovation. The findings underscore the importance of sustainable leadership and credible information sources in driving frugal innovation within SMEs. They highlight the intricate interdependencies among these variables and emphasize the pivotal role of information credibility in shaping these dynamics. These results carry significant implications for SMEs in Pakistan, shedding light on the mechanisms through which sustainable leadership and reliable knowledge sources can stimulate frugal innovation in emerging economies.

Stock liquidity, financial constraints, and innovation in Chinese SMEs

This study investigates the relationship between stock liquidity and firm innovation for publicly traded growing small and medium-sized enterprises (SMEs) in China using both innovation input and output. We collected samples of 785 SMEs from China’s Shenzhen Growth Enterprises Market without the financial industry from 2010 to 2020. The empirical findings demonstrate a significant positive relationship between stock liquidity and both innovation input, as measured by R&D investments, and innovation output, as proxied by patenting activities. A series of robustness tests demonstrate the reliability of our results. Increased liquidity enhances SMEs' innovation mainly by alleviating financial constraints, whereas the mediating effect of mergers and acquisitions (M&A) is not apparent at the firm level. Furthermore, the inhibitory effect of blockholder ownership on firm innovation is weak. Further analysis reveals that this favorable impact can last for at least four years, with manufacturing SMEs benefiting the most. Our study shows that the innovation abilities of SMEs can be enhanced by improving stock liquidity, which is mainly driven by tackling financial constraints.

SMEs’ innovation and government support during the COVID-19 pandemic

PurposeThere is a need for research examining how governments and firms responded to the coronavirus disease (COVID-19) pandemic. This study investigates the interdependence between governments and innovative small and medium-sized enterprises (SMEs) during the pandemic in relation to the dynamic capabilities and resource dependence theories.Design/methodology/approachWe use World Bank survey data collected immediately before and after the COVID-19 outbreak and a generalized structural equation model to examine the mediating role of government support in the relationship between firm innovation, resilience and survival.FindingsInnovative SMEs exhibited higher resilience and a better chance of survival during the pandemic, partly due to attracting more government support.Originality/valueThis study offers a novel understanding of the government’s role in supporting innovative SMEs during the pandemic. The findings have implications for how government support policies can limit the deadweight effect and the substitution effect.

Employee protection and innovation in small and medium-sized enterprises: the moderating effect of regional digitalization

Prior research suggests the increasingly important role of employees in identifying and generating innovative opportunities in the digital economy, yet our understanding of the effect of employee protection on the innovation of small and medium-sized enterprises (SMEs) remains limited. This study addressed this gap, we integrate the resource-based view and institutional perspective to examine how employee protection affects SMEs innovation in emerging economies. Using negative binomial regression and the analysis of a national survey of 1698 Chinese private SMEs, we show that employee protection has an inverted U-shaped effect on SMEs innovation. Furthermore, this curvilinear relationship is positively moderated by regional digitalization such that the inverted U-shaped relationship is intensified when firms are in regions with higher levels of digitalization. Overall, this study contributes to the literature on SMEs innovation by examining how SMEs innovation is shaped by employee protection in the digital age. We also contribute to the employee protection literature by investigating its complicated effect on SMEs innovation in emerging economies.

Dynamics of digital change – measuring the digital transformation and its impacts on the innovation activities of SMEs

PurposeDigital transformation has gained particular interest among academics and policymakers in recent years. However, the empirical quantification of digital transformation stages and their impact on innovation in small and medium-sized enterprises (SMEs) remains understudied. Therefore, this study aims to investigate the impact of digital transformation stages on a differentiated measurement of innovation performance in SMEs.Design/methodology/approachThe authors propose a simplified one-dimensional digital maturity path to estimate the stages of digital transformation in SMEs. The authors validate their approach with a cluster analysis and perform an ordered logistic regression to estimate the impact of digital transformation stages on SMEs' innovation performance.FindingsThe authors' results show that digital transformation in general has a positive impact on SMEs' innovation performance. More precisely, the authors find that the early stage of digital transformation has a detrimental effect on innovation performance, while significant and positive effects can be expected from the experimental stage onward. Furthermore, the advanced stage of digital transformation significantly increases the probability of producing radical innovations.Originality/valueThis study contributes to the ongoing discussion about the relationship between digital transformation and innovation in SMEs by presenting an approach to quantify digital transformation stages in SMEs. Additionally, this study provides new insights into the specific dynamics of the relationship between different stages of digital transformation and their impact on a differentiated measurement of innovation performance, including technological, non-technological and radical innovation.

The impact of digital financial inclusion on innovation in small and medium-sized enterprises

Small and medium-sized enterprises (SMEs)account for 95.68% of China's enterprise households and are important contributors to national development. The introduction of more policies aimed at the development of SMEs has demonstrated the importance of SMEs in terms of policy and strategy. Enterprise innovation is an extremely important part of enterprise development, but compared with medium and large enterprises, SMEs are vulnerable to financial constraints due to their single product, insufficient guarantees, and unbalanced allocation of external financial resources, resulting in a lack of funds to invest in enterprise innovation, which makes it difficult for them to realize their own development. Digital financial inclusion (DFI) is an emerging financial model based on new technology, DFI can improve those financial individuals and groups that are constrained in traditional finance. DFI can make it easier for people and businesses to access financial services through digital technology. In this paper, we use the DFI index of Peking University from 2011 to 2020, as well as the enterprise data of CSMAR to data analyze the impact of DFI on SMEs' innovation. The paper first uses a fixed-effects model for this purpose, and then takes financing cost as a mediating variable to analyze the channels of influence. The regression results show that DFI has an important role in promoting SME innovation, and that DFI can promote SMEs innovation by reducing the cost of financing.

Impact of Digital Financial Inclusion on Small and Medium-Sized Enterprises

With the rapid development of digital technology, Digital Inclusive Finance (DIF) has emerged and gradually become an important part of financial services. DIF expands service coverage and financing channels through digital technology, bringing a new kind of development opportunity for Small and Medium-Sized Enterprises (SMEs). This paper analyses the enterprises broken down into different regional and different property rights systems in order to study the degree of impact of DIF on SMEs from the perspectives of financing constraints and transformation and upgrading. It then draws the conclusion that DIF has a facilitating effect on SMEs. It can alleviate the financing constraints and reduce the financing cost of SMEs through DIF, which can help to reduce the financing cost of SMEs and improve their development. financing constraints and reduce financing costs, thus promoting innovation and upgrading of SMEs. The effects of digital financial inclusion on SMEs vary depending on location and ownership structures. From a regional perspective, digital financial inclusion has a greater impact on SMEs in the central and western regions than it does on SMEs in the eastern regions. From the perspective of property rights, non-state-owned SMEs have a greater impact on digital financial inclusion than state-owned businesses.

Managing Technological Innovation: Dynamic Capabilities, Collaborative Innovation, and Born-Digital SMEs' Performance

In contrast to the digital transformation of the incumbents, born-digital small- and medium-sized enterprises (SMEs) embrace digital logic in the organization's design, processes, and governance from the very start. So far, scholars have focused on the digital transformation of the incumbents; thus, little is known about how dynamic capabilities, collaborative innovation, and firm performance interact in the context of born-digital SMEs—a new generation of digital firms with no legacy of the incumbent firm. Therefore, the study's research question is how dynamic capabilities and collaborative innovation affect the performance of born-digital SMEs. We aim to investigate the impact of the dynamic capabilities of born-digital SMEs on their performance when collaborative innovations mediate it. The empirical research was based on 268 complete viable responses from born-digital SMEs in the U.S., Sweden, and Lithuania. The study results show that dynamic capabilities' effect on born-digital SMEs' performance is more potent when mediated by collaborative innovations. Furthermore, the study highlights that although the impact of dynamic capabilities on partnership networks and relational collaboration is significant, only relational collaboration significantly affects the performance of born-digital SMEs. Our study contributes to the management of technology literature by advancing knowledge on dynamic capabilities and collaborative innovation of born-digital SMEs. In addition, we are exposing the limited role of partnership networks in born-digital SMEs' superior performance and spotlighting the significance of relational collaboration—cocreating innovative products and services and sharing the cocreated value among the relevant partners.

Digitalization of small and medium-sized family enterprises: The key role of succession

Family small and medium-sized enterprises (SMEs) represent a peculiar context for investigating digitalization since the vital link between the family and the business turns into distinctive approaches to innovation relative to nonfamily firms. Although extant literature acknowledges that all firms are increasingly required to respond to the challenges of the digital economy, the current knowledge about how family SMEs pursue digital innovation and how it impacts the organization is still limited. Similarly, understanding if and how succession plays a role in innovation and digital change development in family firms is a topic that needs further investigation. A qualitative study of six Italian family SMEs currently undergoing their digitalization journeys detected three types of digitalization (molt, turmoil, and clear-cut) that are deeply connected with different succession experiences, different levels of business family support, and various levels of strategic planning. The findings highlight the central role of succession and intergenerational dialogue in fostering digitalization in family firms. The paper contributes to the general literature about digital innovation in family SMEs and mainly speaks to that literature focused on the relationship between technological innovation and succession, offering new and deeper insights into the relationship between the family, the person who is in charge of managing digitalization in these firms and the whole digitalization process. Contributions to practice are also outlined: the three types of digitalization represent a valuable tool to sustain consultants and family firms’ owners in digitalizing these organizations.

To Go or to Not Go Green for SMEs: Toward the Twinning Effect of Ecodesign Practices and Radical Innovativeness on SME Performance

Despite the burgeoning literature on green innovation, the research on how it influences the business performance of small- and medium-sized enterprises (SMEs) is relatively scarce. For SMEs, environmental sustainability is becoming an increasingly crucial consideration in the design and conception of their business models. In this article, we explore the determinants of SME performance by investigating the relationship between the ecodesign practices and business performance of SMEs. To further explain and clarify their association, we propose a model for examining the mediating role of radical innovativeness, i.e., firms’ commercialization of an entirely novel idea, new to the firm and its markets. The data are obtained from a relatively heterogeneous sample of 370 SMEs cutting across many industries and regions in France. Structural equation modeling is then employed to analyze the collected data. By applying the concepts from resource-based view theory, we find that the relationship between ecodesign practices and business performance, as measured by financial and nonfinancial indicators, is better understood if the influence of radical innovativeness, as a mediating variable, is considered. By incorporating ecodesign practices and radical innovativeness into the analysis of SME performance, this study provides several important theoretical and practical implications for promoting green innovation for SMEs.

A perspective of international performance improvement concentrating on innovation and digital resilience of SMEs: the case of an emerging economy

PurposeDespite the wide research and discussion on international performance, innovation and digital resilience dimensions of enterprises, the investigation and understanding of their interrelations seem to be limited. The purpose of this study is to identify the influential factors affecting the mentioned dimensions, determine the causal relationships among these identified factors and finally evaluate their importance in an aggregated framework from the viewpoint of small and medium-sized enterprises (SMEs).Design/methodology/approachA hybrid methodology is used to achieve the objectives. First, the main factors of international performance, innovation and digital resilience are extracted by an in-depth review of the literature. These factors are then screened by expert opinions to localize them in accordance with the conditions of an emerging economy. Finally, the relationship and the importance of the factors are determined using an uncertain multi-criteria decision-making (MCDM) approach.FindingsThe findings reveal that there is a correlation between digital resilience and innovation, and both factors have an impact on the international performance of SMEs. The cause-or-effect nature of the factors belonging to each dimension is also determined. Among the effect factors, business model innovation (BMI), agility, product and organizational innovation are known as the most important factors. International knowledge, personal drivers and digital transformation are also determined to be the most important cause factors.Originality/valueThis study extends the literature both in methodological and practical directions. Practically, the study aggregates the factors in the mentioned dimensions and provides insights into their cause-and-effect interrelations. Methodologically, the study proposes an uncertain MCDM approach that has been rarely used in previous studies in this field.