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5. Conclusions
About 8% of the firms in the sample could be defined as innovative growth SMEs. Most of these
firms belong to the branches of services and manufacturing. Firms with IPRs are small in size,
employing 10-49 people, and belong to the age range of 5 – 19 years, similarly to the distribution of
the whole sample (Table 1). One-fifth of them is located in rural areas.
In this study the impact of location, branch of industry, size and age as well as success and
public R&D funding on innovativeness has been tested. Finnish growing SMEs cannot be
characterized to be outstandingly radically innovative either in rural or in urban areas. The result is
parallel to that of North and Smallbone (2000) who concluded that relatively little difference is
found in the level of innovation between SMEs in the different areas.
The size and age of the firm did not differentiate IPR-intensive firms from their non-IPR
intensive counterparts. This does not inevitably mean that such differences do not exist but the result
is opposite to those of many former studies (Battacharya and Bloch, 2004; Bouwer and Kleinknecht,
1999) that support the resource advantage of large firms or the importance of age (Churchill, 2000;
Davidsson and Delmar 1997; Huergo and Jaumandreu, 2004) in creating IPRs. The conclusions are
parallel to those of Kohn and Scott (1982), who suggested that scale economies in producing
innovative output are not necessarily decisive.
Coad and Rao (2008) discovered that IPRs may be of crucial importance, especially to highly
growing firms. This study confirms that the connection between IPRs and success is a complex
phenomenon. In the short term a negative relationship may even exist between innovations and
success (Bhide 2000; Freel and Robson 2004). The results also propose that there is a positive
correlation between innovativeness and productivity of labour. On the other hand, higher
productivity of labour may result from the increase in capital intensiveness, which may decrease the
productivity of capital (return on investment). Thus, higher productivity may lead to lower success
because success is a function of the productivity of capital.
IPR-intensive growing firms may confront more financial pressures than those without IPRs.
One explanation for this may be simultaneous heavy investment in R&D and the need for plenty of
working capital at the growth stage. The results support the prior findings of Autio (2009), Bhide
(2000) and Davidsson and Delmar (1997) that most successful businesses do not start or look for
new opportunities by exploiting new radical innovative concepts. Instead, most entrepreneurs seem
to start or grow by imitating or slightly modifying the existing products or services or by acquiring
external innovations.