Dealing with adversity: innovation among small and medium-sized enterprises in developing economies

Abstract

PurposeSmall and medium-sized enterprises in developing countries, particularly in the Sub-Saharan African region, find it hard to innovate due to severe resource constraints and high institutional voids. Given this, the paper examines three international strategic responses that small and medium-sized enterprises in Sub-Saharan Africa adopt to implement innovations in the face of weak institutional environments.Design/methodology/approachUsing comprehensive data from the World Bank Enterprise Survey, the study applies the Instrumental Variable Probit approach to analyse a sample of 8,466 SMEs from eleven countries in the Sub-Saharan African region.FindingsThe empirical results show that foreign ownership negatively affects product and process innovation. Additionally, the results reveal that small and medium-sized enterprises that leverage exporting and international quality certifications are likely to implement innovations.Originality/valueThe paper contributes to the literature by suggesting that small and medium-sized enterprises must exploit strategic alternatives to improve their innovation efforts when operating in a weak institutional environment. Thus, by exploring international strategic responses to institutional difficulties when implementing innovations, this paper goes beyond the prevailing research approach in developing countries that mainly emphasises the barriers to innovations.