What factors do SMBs think are most important for innovation?


Thinking

Credit: Holly Marie Photography

I came across an nice 2003 study by Dutch academics titled, SME innovation and the crucial role of the entrepreneur. The study’s purpose was to ask small and midsize enterprises (SMEs) what they viewed the most important factors in innovation to be. In this study, SMEs consist of 100 employees or less.

Rather than have the businesses come up with their own factors, the academics conducted an extensive survey into the prevailing studies on the matter. From this survey, they culled to the 14 most commonly mentioned bases for innovation. The 14 factors

They then asked 167 firms to answer 50 different questions, which resolved to the 14 factors. From these responses, they generated a statistically valid ranking of the what small businesses consider to be the most important drivers of innovation.

Before discussing these ranked factors, it’s interesting to note the academics’ take on this. They came up with a really rough ordering of the most important innovation factors, based on their frequency in research studies. They then compared the research studies to what the businesses themselves identified. It’s of interest to see the discrepancies.

The chart below shows how business ranked the 14 factors, along with their approximate frequency in research work.

SMBs 14 factors for innovation

The findings are useful, and perhaps not surprising. In a firm with under 100 employees, the entrepreneurial zeal of a founder certainly is a key driver of innovation. Unique product advantages make sense as the #2 factor – although perhaps that’s a bit confusing in that innovation produces the unique product advantages.

Innovation culture comes in for #3. This is important, and my guess is that if you were to survey growing sizes of firms, this factor would rise in the rankings.

Check out the full paper for details.

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About Hutch Carpenter
Chief Scientist Revolution Credit

3 Responses to What factors do SMBs think are most important for innovation?

  1. Jo Jordan says:

    Entrepreneuer are concentrating on action – who does what. This can be a natural bias because they have to get things done.

    They are also neglecting the external environment – a focus which is actually essential to remaining energetic provided of course interest in the outside world is couched as active servicing rather than passive receiving.

    Which list do you assume to be more accurate BTW?

    • Early in a company’s life, it’s all about the entrepreneur. They have the vision and energy to drive innovation. I’m going to look to the SMBs themselves for their take, just because they’re living it every day. These companies have a sense of what innovation looks like and how it helps them. Take, for instance, innovation culture. I know that’s important, and becomes more so as the company grows larger. Once the entrepreneur can’t be everywhere all the time, other parts of the company need the presence of mind to see new possibilities, and the internal expectation that they’ll promote and implement them. Funny that researchers haven’t spent much time on that.

  2. Thom Ruhe says:

    Hutch,

    Interesting analysis – both in the post and the comments thread. I share your view on the importance of innovation culture, especially with regard to entrepreneurs growing their venture(s) into the “gazelle” stage and beyond.

    Check out what we’re doing with the “E=R” Campaign at the Kauffman Foundation to raise awarenewss and support for entrepreneurs: http://www.entrepreneurship.org/eequalsr

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