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Perceived Environmental Uncertainty and Innovation in Small Firms

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  • Mark Freel

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Abstract

Employing data, from a recent survey of Scottish and Northern English Small- and Medium-sized Enterprises (SMEs), the current paper provides new evidence of the extent to which perceptions of environmental uncertainty (dynamism, complexity and hostility), along a number of dimensions, discriminate between small firms engaged in various levels of product innovation. Drawing, broadly, upon an extended version of the classic Miles and Snow schema, novel innovators appear to be marked by perceptions of uncertainty in market and technological environments, but by perceptions of a relatively certain or benign competitive environment. Moreover, the paper observes some dissimilarities between manufacturing and service firms. For instance, higher levels of innovation in manufacturing firms are associated with higher perceptions of supplier uncertainty, whilst, higher levels of innovation in service firms are associated with higher perceptions of human resource uncertainty. Copyright Springer 2005

Suggested Citation

  • Mark Freel, 2005. "Perceived Environmental Uncertainty and Innovation in Small Firms," Small Business Economics, Springer, vol. 25(1), pages 49-64, August.
  • Handle: RePEc:kap:sbusec:v:25:y:2005:i:1:p:49-64
    DOI: 10.1007/s11187-005-4257-9
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    File URL: http://hdl.handle.net/10.1007/s11187-005-4257-9
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    References listed on IDEAS

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    1. Oerlemans, L. A.G. & Buys, A.J. & Pretorius, M.W., 2001. "Research Design for the South African Innovation Survey 2001," Working Papers 01.02, Eindhoven Center for Innovation Studies.
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    Citations

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    Cited by:

    1. Vivek Ghosal & Yang Ye, 2015. "Uncertainty and the employment dynamics of small and large businesses," Small Business Economics, Springer, vol. 44(3), pages 529-558, March.
    2. repec:kap:sbusec:v:50:y:2018:i:4:d:10.1007_s11187-017-9896-0 is not listed on IDEAS
    3. Lucile Defays & Josée St-Pierre, 2014. "Exporting to non-traditional markets: reducing uncertainty for SMES," Post-Print hal-01704914, HAL.
    4. González-Benito, Javier & Reis da Rocha, Duilio & Queiruga, Dolores, 2010. "The environment as a determining factor of purchasing and supply strategy: An empirical analysis of Brazilian firms," International Journal of Production Economics, Elsevier, vol. 124(1), pages 1-10, March.
    5. repec:eee:iburev:v:27:y:2018:i:4:p:838-851 is not listed on IDEAS
    6. Reade, Carol & Lee, Hyun-Jung, 2016. "Does ethnic conflict impede or enable employee innovation behavior? The alchemic role of collaborative conflict management," LSE Research Online Documents on Economics 65613, London School of Economics and Political Science, LSE Library.
    7. Pierre-André Julien & Josée St-Pierre, 2012. "Entrepreneur, incertitude et information : un essai d’application," Post-Print hal-01705651, HAL.
    8. André van Stel & Lorraine Uhlaner & Haibo Zhou & Valerie Duplat, 2012. "Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth," Scales Research Reports H201211, EIM Business and Policy Research.
    9. Lorraine Uhlaner & André Stel & Valérie Duplat & Haibo Zhou, 2013. "Disentangling the effects of organizational capabilities, innovation and firm size on SME sales growth," Small Business Economics, Springer, vol. 41(3), pages 581-607, October.
    10. Prajogo, Daniel I., 2016. "The strategic fit between innovation strategies and business environment in delivering business performance," International Journal of Production Economics, Elsevier, vol. 171(P2), pages 241-249.
    11. Trushin, Eshref & Ugur, Mehmet, 2018. "Ecosystem complexity, firm learning and survival: UK evidence on intra-industry age and size diversity as exit hazards," Greenwich Papers in Political Economy 19095, University of Greenwich, Greenwich Political Economy Research Centre.
    12. repec:spr:manint:v:54:y:2014:i:5:d:10.1007_s11575-014-0219-2 is not listed on IDEAS
    13. Patrick Kreiser & Louis Marino & Donald Kuratko & K. Weaver, 2013. "Disaggregating entrepreneurial orientation: the non-linear impact of innovativeness, proactiveness and risk-taking on SME performance," Small Business Economics, Springer, vol. 40(2), pages 273-291, February.
    14. Ana Ferreira & Ana Lúcia Teixeira, 2016. "Intra- And Extra-Organisational Foundations Of Innovation Processes — The Information And Communication Technology Sector Under The Crisis In Portugal," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 20(06), pages 1-44, August.

    More about this item

    Keywords

    environmental uncertainty; innovation; small firms; D81; L21; O32; M13;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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