Innovation and Business Performance in Small Enterprises: An Enterprise-Level Analysis

Abstract

This paper explores links between developed innovations and business performance in small enterprises with fewer than 50 employees. It also examines how performance has changed over time during a period of five years. The empirical evidence is based on two quantitative datasets describing innovation and business performance in 145 small enterprises in 2005–2009. The study makes a contribution to academic literature by providing a detailed view of the differences in performance across innovation types. The results suggest that during the period of five years, non-innovators have been the best performing enterprises in terms of operating earnings and return on investments while radical innovations can be connected with sales growth. During the recession, the less vulnerable enterprises have been non-innovators and innovators characterised by the high diversity of developed innovations. Applying these results helps small business owners to consider what is the nature and timescale for getting return on innovations.

Innovation and organisational performance: A critical review of the instruments used to measure organisational performance

“…Firstly, authors argue that innovative behaviour leads to improved operational performance such as cost efficiency, quality improvement and speed to market, which ultimately results in higher profitability and sales growth (Cambra-Fierro et al 2011;Ul Hassan et al 2013). Secondly, authors (Basterretxea & Martinez 2012;Cortez & Cudia 2010;Forsman & Temel 2011) argue that both profitability and sales growth are the most common indicators used in prior studies to measure organisational performance and, as such, enable a comparison between the output of prior studies and the study in question.…”

Technology Orientation, Innovation and Business Performance: A Study of Dubai SMEs

“…Keizer et al [49] emphasize that the firm's innovation performance depends on the opportunities provided by their external environment. SMEs in Dubai can use innovation as a tool to achieve better business performance [6] , having in mind that important innovations are those that contribute to business performance [25] . Some studies have found a significant relationship between innovation and sales growth and profitability [50] while others have found a non-significant relationship between innovation and return on investment [6] , but the link between innovation and business performance needs to be tested in a different market context [51] .…”

“…An increasing number of studies have explored the impact of strategic orientations (for example technology orientation) on innovation and business performance [4,5] . Previous studies have focused on Western markets and have yielded mixed results, some positive, some negative and some have found no evidence of an impact [5,6,7] .…”

Supply chain management problems in the food processing industry: Implications for business performance

“…The negative correlation and beta imply that the existence of technology-related problems has the effect of reducing the performance of businesses in the food processing industry. In support, the results of studies conducted by Tavitiyaman, Zhang andQu (2011) andForsman andTemel (2011) showed a strong negative relationship occurring between technology-related problems and business performance. These results were connected to the decrease in both market share and profits by businesses experiencing technology-related problems, as they were unable to match the performance of their technologically advanced competitors.…”