Redressing oversights: exploring informal innovation in small IT firms

Drawing on a cross-national multiple-case study method, this paper investigates the appropriateness of existing measures of innovation to small firms. The innovation measurement techniques used internationally concentrate largely on product innovation, patent counts, R&D spend and employment data and bibliometric data. Each alludes to a formalised innovation process within the firm. Accordingly, the less formalised processes that exist within many entrepreneurial small firms create the opportunity for innovation to occur, but do not offer comprehensive data on either the inputs or outputs of the innovation process. Following an exploration of traditional and alternative measures of innovation in use currently, these measures are questioned in the context of small firm requirements and practices using data from an exploratory study of IT firms from Finland and Australia. The findings indicate a need for alternative measurements of informal innovation and R&D for small firms. Measures of informal innovation are proposed which better reflect the innovation processes occurring in smaller firms.