In theory, IT integration through applications such as ERP, MRP-II and EDI provides an organization with the ability to exploit innovation capabilities. Based on survey data obtained from 309 Canadian manufacturing SMEs, this study aims to identify the enabling effect of IT integration upon the innovation capability of manufacturing SMEs, that is, in terms of growth and productivity outcomes, and to verify if this effect is subject to industry influences. While the firm's innovation capability was found as expected to be positively related to the growth and productivity of manufacturing SMEs, the results underline paradoxical effects of IT integration in this regard. While IT integration was seen to enable the innovation capability of manufacturing SMEs in terms of growth, it was also seen to have a disabling effect on this same capability with regard to productivity.Keywords: innovation capability, product innovation, process innovation, IT integration, R&D, growth, productivity, innovation, SME, paradox 2 Innovation Capability and Performance of Manufacturing SMEs:The Paradoxical Effect of IT Integration
AbstractIn theory, IT integration through applications such as ERP, MRP-II and EDI provides an organization with the ability to exploit innovation capabilities. Based on survey data obtained from 309 Canadian manufacturing SMEs, this study aims to identify the enabling effect of IT integration upon the innovation capability of manufacturing SMEs, that is, in terms of growth and productivity outcomes, and to verify if this effect is subject to industry influences. While the firm's innovation capability was found as expected to be positively related to the growth and productivity of manufacturing SMEs, the results underline paradoxical effects of IT integration in this regard. While IT integration was seen to enable the innovation capability of manufacturing SMEs in terms of growth, it was also seen to have a disabling effect on this same capability with regard to productivity.Keywords: innovation capability, product innovation, process innovation, IT integration, R&D, growth, productivity, innovation, SME, paradox
IntroductionInnovation has long been considered as the key factor for the survival, growth and development of small and medium-sized enterprises (SMEs) (Acs and Audretsch, 1990;Becheikh, Landry and Amara, 2006). Developing their capacity to innovate is a mission-critical task for all organizations. Given the specificities of SMEs with regard to their environment, strategy, structure and technology, more research in this specific context is thus needed, including information technology (IT) in particular (Gable and Stewart, 1999;Premkumar, 2003). These specificities also imply that research findings in the large enterprise context do not automatically extend to small companies (Thong, Yap and Raman, 1996;Pflughoeft et al., 2003). As SMEs differ from large organizations, a greater innovation capacity is deemed to counterbalance their greater vulnerability in a global business environment and in ...