dissertation in pdf-format - Aalto-yliopisto

Robson, 2004; Hölzl, 2009 ; Koellinger, 2008; Roper, 1997; Thornhill, 2006; Thornhill and
Gellatly, 2005).
However, several empirical studies have impugned or pointed out the complex nature of the
relationship between success, innovations and growth of the firm. Some of these studies showed that
innovators have not experienced sales or employment growth. The distribution of their growth rates
is highly negatively skewed (Freel, 2000). On the other hand, the correlation between sales of
innovative products and patenting is far more positive (Brouwer and Kleinknecht, 1999). These
relationships seem to be time dependent, too. For example, Freel and Robson (2004) discovered that
at least in the short term, a negative relationship between product innovation, growth and
profitability of a firm. Further, Bhide (2000) argued that risky behaviour should lead to higher
performance in the longer run because in spite of high variance in short-term income, it may lead to
greater mean values in the long run.
Coad and Rao (2008) pointed out that on average a firm experiences only modest growth of
sales. The firms grow for a number of reasons, which may or may not be related to IPR activity.
They discovered that the returns from IPRs are highly skewed and the distributions rates of growth
are heavily tailed. Moreover, they observed that IPRs are of crucial importance to growing firms,
especially for a handful of superstars i.e. high-growth firms.
Markides (1998) and Moskowitz and Vissing-Jørgenssen (2002) discovered that the creation of
new products seems to demand a great deal of resources. It has been estimated that almost two-
fifths (38 %) of commercialisations of new products fail to progress from original ideas to
commercially successful products. The impact of innovations on economic performance is highly
uncertain. For example, it may take on the average 10-12 years for the return on investment of new
ventures to equal that of mature businesses, or 7-15 years from radical invention to financial success
(Kanter, 1985).
The financial profile of growing innovative SMEs could be seen as low liquidity and high debt
ratio, the characteristics, associated usually with failed firms. A Small size and financial resource
base may cause constrained financial management opportunities during the simultaneous R&D and
growth period. This could indicate that the financial success of the firm will have an impact on its
innovation activity. The following hypothesis 4 is based on the assumption that growing SMEs
might experience even more financial challenges or pressures during their simultaneous IPR efforts
and growth period than other firms since the simultaneous generation of IPRs and growth business
activities requires plenty of resources.