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Does Innovation Matter for SMEs' growth in Croatia?

In: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change. April 13th - 14th, 2018, Dubrovnik, Croatia

Author

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  • Šarlija, Nataša
  • Bilandžić, Ana

Abstract

Small and medium sized enterprises (SMEs) account for about 99% of all enterprises in Croatia as well as in the EU economy. In most industries, SMEs attribute for much of the capital stock, employment, and a significant fraction of innovations. Among all SMEs, those that are growth oriented make most tangible contribution to economic growth. This is the reason why it is especially important to understand how SMEs grow. Numerous research studies are devoted to investigating factors related to growth. They have usually been understood in terms of three main categories: the entrepreneur, the enterprise and the environment. Among factors of growth on the side of the enterprise, one of the most frequently reported in articles is innovation. However, the question is whether innovation necessarily leads to growth. The aim of this research is to investigate the relationship between high growth and innovation. Data set for this research consists of 181 SMEs from C roatia. Empirical analysis in this research has been conducted in four stages. In the first stage, SMEs that have come out as innovative are compared with SMEs that are not innovative. Differences exist in human capital, profitability, export, market and strategic orientation, novelty of technology and products. The second stage included comparison between high-growth SMEs and non-high-growth SMEs. High-growth SMEs are younger, have better turnover capacity, use newer technologies, are more oriented to growth and more financed from internal resources. The third part of the analysis which included comparison between high-growth SMEs that have come out as innovative and high-growth SMEs that have not come out as innovative shows differences only in indebtedness and novelty of products. The final stage of the research covered a model development for high-growth estimation by using factor analysis and logistic regression in order to estimate probability of an SME to achieve high growth and to identify factors that influence growth. It has been shown that variable indicating existence of innovation in the enterprise is not present among factors that influence growth. This research raises the question of understanding innovations as well as what kind of innovative enterprises really exist in Croatia.

Suggested Citation

  • Šarlija, Nataša & Bilandžić, Ana, 2018. "Does Innovation Matter for SMEs' growth in Croatia?," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 356-375, Governance Research and Development Centre (CIRU), Zagreb.
    • Handle: RePEc:zbw:ofel18:180002
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