dissertation in pdf-format - Aalto-yliopisto

WHICH FACTORS AFFECT THE INNOVATIVENESS OF GROWING SMEs?
Abstract
Purpose – The purpose of this paper is to find out which factors affect the innovativeness of
growing small and medium- sized firms (SMEs). Intellectual property rights (IPRs) are used as a
proxy for innovations. The IPRs used include patents, trademarks, utility models and registered
designs.
Design/methodology/approach – A theoretical model was developed and tested on longitudinal
sample data consisting of 348 continuously growing SMEs that were located in two diverse regions
in Finland. The firms in the sample represented various industries. Logistic regression analysis was
used to analyse the data.
Findings – 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. These businesses are small in
size, employing 10-49 people, and their age range is 5–19 years. These firms are less likely to be
successful in the short run. The results of the study seem to respond to the expected preconception
that IPR-intensive growth firms may confront more financial pressures than those without IPRs.
Public R&D funding seems to increase the probability of innovations.
Practical implications – From the policy perspective the allocation of resources to R&D has been
an appropriate strategy to increase the amount of IPRs within growth SMEs.
Originality/value – The paper is one of the few attempts to explore the factors affecting the
innovativeness of growing SMEs.
Keywords – IPRs, growth, success, location, R&D funding, Finland
Paper type – Research paper
1. Introduction
In entrepreneurship and management studies the innovativeness of growing firms has been
discovered to be important in value and job creation (Acs et al., 2008; Autio, 2009; Autio and
Hoeltzl, 2008; Bhide, 2000; Birch, 1979; Delmar et al., 2003; Deschryvere, 2008; Henrekson and
Johansson, 2008; Parker et al., 2010; Storey, 1994). It is stated that innovations do not arise
randomly but are the results of intentional and systematic processes (Barringer et al., 2005; Teece,
1986; Markides, 1998; Santarelli and Piergiovanni, 1996; Thornhill, 2006; von Hippel, 1982). The
capability to create, transfer and exploit innovations is thought to have a positive impact in different
regions and economies (Fontes, 1997; Kuratko and Hodgetts, 2001; North and Smallbone, 2000;
Storey, 1994). The main idea behind these studies is that innovativeness and growth are positively
correlated.
There is a lack of studies that have examined simultaneous innovativeness and growth
longidutinally. It is a widely accepted view that urban areas have higher performance and more
original innovations than pheriperal regions. Some empirical studies have shown that the operation
environment of the firm moderates the relationship between sales growth rate and executives’