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Importance of Technological Innovation for SME Growth: Evidence from India

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  • Bala Subrahmanya, M. H.
  • Mathirajan, M.
  • Krishnaswamy, K. N.
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    Abstract

    This paper probes the drivers, dimensions, achievements, and outcomes of technological innovations carried out by SMEs in the auto components, electronics, and machine tool sectors of Bangalore in India. Further, it ascertains the growth rates of innovative SMEs vis-à-vis non-innovative SMEs in terms of sales turnover, employment, and investment. Thereafter, it probes the relationship between innovation and growth of SMEs by (i) estimating a correlation between innovation sales and sales growth, (ii) calculating innovation sales for high, medium, and low growth innovative SMEs and doing a aggregate one-way ANOVA, and (iii) ascertaining the influence of innovation sales, along with investment growth and employment growth on gross value-added growth by means of multiple regression analysis. The paper brings out substantial evidence to argue that innovations of SMEs contributed to their growth.

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    File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2010/wp2010-03.pdf
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    Bibliographic Info

    Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Working Paper WP2010/03.

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    Length: 23 pages
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:unu:wpaper:wp2010-03

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    Keywords: Technological innovations; sales growth; auto components; electronics; machine tools; Bangalore;

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    1. Rick Delbridge & Tim Edwards & Max Munday, 2001. "Linking Innovative Potential to SME Performance: An Assessment of Enterprises in Industrial South Wales," ERSA conference papers ersa01p135, European Regional Science Association.
    2. Alex Coad & Rekha Rao, 2006. "Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach," LEM Papers Series 2006/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, December.
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