Antecedents and consequences of small and medium-sized enterprise innovation

Abstract

The purpose of this report is to investigate antecedents and consequences of innovation in small and medium-sized enterprises (SME). The research is anchored on the Resource-Based View of the firm (RBV) that asserts that organisations rely on a combination of unique, inimitable and rare resources and capabilities to deliver innovative solutions for superior business performance. Data for this study was collected via an online survey instrument from 86 representatives of SMEs that operate in South Africa. The responses were subjected to regression and correlation analyses in order to test the hypotheses that were developed based on an extensive literature review exercise. The results revealed that the role of innovation as the mediating factor in relationships of access to knowledge and access to finance with business growth could not be confirmed. It was found that both access to knowledge and access to finance have positive significant, direct correlation with SME business growth. The unanticipated findings of this study are in line with observations of previous research work on the role and effect of SME innovation that had yielded outcomes that were considered ambiguous and inconsistent. The value of this study is that it provides insights, from primarily micro-sized enterprises, on how SMEs grapple with the dilemma of either investing resources in innovation which promises long term sustainable returns or allocating these resources on value-add activities which offer immediate returns