Fueling Innovation through Information Technology in SMEs

Abstract

This paper describes a study that investigates the mediating effects of information technology (IT) on the relationships among product and process innovations and firm performance (measured in multiple profitability and growth rate metrics). Using structural equation modeling on a sample of 397 small and medium‐sized enterprises (SMEs), we find evidence that (1) increases on the strategic emphasis placed on innovation, both product and process, positively impact the prominence managers place on IT; (2) the impact of innovation (both product and process) on performance (both profitability and growth) is primarily indirect, felt via the mechanism of the importance managers place on IT; and (3) an increased emphasis on IT abets managers' perception of their firms' performance, as compared with that observed among peer firms (other SMEs).

Performance Perspectives for Small and Medium Enterprises in Cameroon: Innovation and ICTs

“…In the same manner, the cost of computerization is high whereas technologies tend to quickly become obsolete and they hardly make it possible for a firm to distinguish itself from the others. These results are in line with those of Dibrell et al, (2008) which concludes on the non-significant and negative direct effect of the capacity of innovation on performance. In a context made up of mostly SMEs, this result can be related to the absence of internal competences which halt the activity of innovation or its success on the market.…”

“…Contrary to the positive effect of the existing literature (Dibrell et al, 2008;Huang & Liu, 2005), the effect of the capacity of ICT on the performance of SMEs is negative and significant globally and in the secondary industry; especially since the use of ICT requires new individual and collective competences to the point where innovating firms are tempted to call upon the external labour market to employ these new competences. This is not necessarily efficient for .…”

“…Detailed attention has therefore been given to innovation in recent years by business economics theorists (Mairesse et al, 2002;Charreaux, 2004;Raymond and St-Pierre, 2010;Şipoş et Ionescu, 2015;Rukevwe, 2015;Boachie, 2015;Ndesaulwa, 2016). Some authors find a positive link between the degree of innovation and company performance (Seersucker et al, 2000;Jansen et al, 2006;Dibrell et al, 2008 ;Hajjem et al, 2015), while others (Tidd & Driver, 2000;St-Pierre et al, 2003) obtain mitigated results. Faced with the absence of a consensus on the relationship between innovation and performance in the literature, a mastery of Information and Communication Technologies (ICT) in production units remains a major stake to improve this relationship within firms.…”

“…The interaction between ICT and the capacity of innovation 3 on performance has led to contradictory results in previous studies. Some studies (Taiwan, Huang & Liu, 2005;Dibrell et al, 2008) show an absence of a direct relationship between innovation and performance and highlight an indirect relationship via the importance given to ICT by the managers. On the other hand, other authors (d 'Aral & Weill, 2007;Kuusisto & Riepula, 2011;Tambe et al, 2012;Kmieciak et al, powerful company to result in a company innovating, efficient, reactivates and which evolves/moves surely and durably.…”

“…In a more general manner, the use of ICT as lever of the benefits of the innovativeness of the companies originates from their capacity to accelerate the process of innovation (Pavlou and Sawy, 2006) or their capacity to better identify the emergent needs of the market (Tambe et al, 2012). Many studies are of the opinion that the problems involved in the use of ICT tools in business practices and the separate or joint adoption of the various types of innovation are the first obstacles to the development of SMEs, rather in front of the problems of corruption, deficiency of the infrastructures or excess taxation (Huang and Liu, 2005;Dibrell et al, 2008). In fact, for their proper functioning, SMEs need the right combination between ICT and innovation.…”