IDEAS home Printed from
   My bibliography  Save this paper

Innovation and business performance for Spanish SMEs: new evidence from a multi-dimensional approach


  • Alfonso Expósito

    (Department of Economic Analysis and Political Economy, University of Seville, Calle San Fernando 4, 41004 Sevilla (Spain).)

  • Juan A. Sanchis-Llopis

    (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)


This paper examines the impacts of product, process, and organisational innovations on two alternative dimensions of business performance: finance and operations. Two indicators capture financial performance: sales increase and production cost reduction. Operational firm performance is captured by two alternative indicators: productive capacity augmentation and quality improvement of product/service provided by the firm. Using a wide-ranging sample of Spanish SMEs, our findings highlight the existence of significant impacts of innovation on both these dimensions of business performance, although these impacts differ regarding the type of innovation and the performance indicator considered. Furthermore, our results indicate that the relationship between innovation choices in SMEs and business performance should be analysed from a multidimensional approach. These findings reveal significant implications for innovation policies and innovation strategies for SMEs.

Suggested Citation

  • Alfonso Expósito & Juan A. Sanchis-Llopis, 2018. "Innovation and business performance for Spanish SMEs: new evidence from a multi-dimensional approach," Working Papers 1805, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1805

    Download full text from publisher

    File URL:
    File Function: First version, 2018
    Download Restriction: no

    References listed on IDEAS

    1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
    2. José Calvo, 2006. "Testing Gibrat’s Law for Small, Young and Innovating Firms," Small Business Economics, Springer, vol. 26(2), pages 117-123, March.
    3. Milé Terziovski, 2010. "Innovation practice and its performance implications in small and medium enterprises (SMEs) in the manufacturing sector: a resource‐based view," Strategic Management Journal, Wiley Blackwell, vol. 31(8), pages 892-902, August.
    4. Bronwyn Hall & Francesca Lotti & Jacques Mairesse, 2009. "Innovation and productivity in SMEs: empirical evidence for Italy," Small Business Economics, Springer, vol. 33(1), pages 13-33, June.
    5. Harrison, Rupert & Jaumandreu, Jordi & Mairesse, Jacques & Peters, Bettina, 2014. "Does innovation stimulate employment? A firm-level analysis using comparable micro-data from four European countries," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 29-43.
    6. Acs, Zoltan J & Audretsch, David B, 1988. "Innovation in Large and Small Firms: An Empirical Analysis," American Economic Review, American Economic Association, vol. 78(4), pages 678-690, September.
    7. Priit Vahter & James H. Love & Stephen Roper, 2014. "Openness and Innovation Performance: Are Small Firms Different?," Industry and Innovation, Taylor & Francis Journals, vol. 21(7-8), pages 553-573, November.
    8. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    9. Li-min Hsueh & Ying-yi Tu, 2004. "Innovation and the Operational Performance of Newly Established Small and Medium Enterprises in Taiwan," Small Business Economics, Springer, vol. 23(2), pages 99-113, September.
    10. Christos Kalantaridis, 1999. "Processes of innovation among manufacturing SMEs: the experience of Bedfordshire," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 11(1), pages 57-78, January.
    11. Mayer-Haug, Katrin & Read, Stuart & Brinckmann, Jan & Dew, Nicholas & Grichnik, Dietmar, 2013. "Entrepreneurial talent and venture performance: A meta-analytic investigation of SMEs," Research Policy, Elsevier, vol. 42(6), pages 1251-1273.
    12. Howard Van Auken & Antonia Madrid-Guijarro & Domingo Garcia-Perez-de-Lema, 2008. "Innovation and performance in Spanish manufacturing SMEs," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 8(1), pages 36-56.
    13. John Antonakis & Samuel Bendahan & Philippe Jacquart & Rafael Lalive, 2010. "On making causal claims : A review and recommendations," Post-Print hal-02313119, HAL.
    14. Hall, B.H., 2011. "Innovation and productivity," MERIT Working Papers 2011-028, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. Juan Mañez & María Rochina-Barrachina & Amparo Sanchis & Juan Sanchis, 2013. "Do process innovations boost SMEs productivity growth?," Empirical Economics, Springer, vol. 44(3), pages 1373-1405, June.
    16. Buesa, Mikel & Heijs, Joost & Baumert, Thomas, 2010. "The determinants of regional innovation in Europe: A combined factorial and regression knowledge production function approach," Research Policy, Elsevier, vol. 39(6), pages 722-735, July.
    17. André Spithoven & Wim Vanhaverbeke & Nadine Roijakkers, 2013. "Open innovation practices in SMEs and large enterprises," Small Business Economics, Springer, vol. 41(3), pages 537-562, October.
    18. Autio, Erkko & Kenney, Martin & Mustar, Philippe & Siegel, Don & Wright, Mike, 2014. "Entrepreneurial innovation: The importance of context," Research Policy, Elsevier, vol. 43(7), pages 1097-1108.
    19. Juan A. Máñez & Maria E. Rochina-Barrachina & Juan A. Sanchis-Llopis, 2015. "The Dynamic Linkages Among Exports, R&D and Productivity," The World Economy, Wiley Blackwell, vol. 38(4), pages 583-612, April.
    20. Vásquez-Urriago, Ángela Rocío & Barge-Gil, Andrés & Modrego Rico, Aurelia, 2016. "Science and Technology Parks and cooperation for innovation: Empirical evidence from Spain," Research Policy, Elsevier, vol. 45(1), pages 137-147.
    21. María Rochina-Barrachina & Juan Mañez & Juan Sanchis-Llopis, 2010. "Process innovations and firm productivity growth," Small Business Economics, Springer, vol. 34(2), pages 147-166, February.
    22. Rong, Baiding & Wilkinson, Ian F., 2011. "What do managers’ survey responses mean and what affects them? The case of market orientation and firm performance," Australasian marketing journal, Elsevier, vol. 19(3), pages 137-147.
    23. Jose-Luis Hervas-Oliver & Francisca Sempere-Ripoll & Carles Boronat-Moll, 2014. "Process innovation strategy in SMEs, organizational innovation and performance: a misleading debate?," Small Business Economics, Springer, vol. 43(4), pages 873-886, December.
    24. James Foreman-Peck, 2013. "Effectiveness and efficiency of SME innovation policy," Small Business Economics, Springer, vol. 41(1), pages 55-70, June.
    25. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2016. "Innovation and firm growth: Does firm age play a role?," Research Policy, Elsevier, vol. 45(2), pages 387-400.
    26. Veugelers, Reinhilde, 1997. "Internal R & D expenditures and external technology sourcing," Research Policy, Elsevier, vol. 26(3), pages 303-315, October.
    27. Elena Golovko & Giovanni Valentini, 2011. "Exploring the complementarity between innovation and export for SMEs’ growth," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(3), pages 362-380, April.
    28. Patrick A.M. Vermeulen & Jeroen P.J. De Jong & K.C. O'shaughnessy, 2005. "Identifying key determinants for new product introductions and firm performance in small service firms," The Service Industries Journal, Taylor & Francis Journals, vol. 25(5), pages 625-640, July.
    29. Huiban, Jean-Pierre & Bouhsina, Zouhair, 1998. "Innovation and the Quality of Labour Factor: An Empirical Investigation in the French Food Industry," Small Business Economics, Springer, vol. 10(4), pages 389-400, June.
    30. Fariborz Damanpour & Kathryn A. Szabat & William M. Evan, 1989. "The Relationship Between Types Of Innovation And Organizational Performance," Journal of Management Studies, Wiley Blackwell, vol. 26(6), pages 587-602, November.
    31. Rosenbusch, Nina & Brinckmann, Jan & Bausch, Andreas, 2011. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing, Elsevier, vol. 26(4), pages 441-457, July.
    32. James G. March & Robert I. Sutton, 1997. "Crossroads---Organizational Performance as a Dependent Variable," Organization Science, INFORMS, vol. 8(6), pages 698-706, December.
    33. Timothy L. Pett & James A. Wolff, 2009. "SME opportunity for growth or profit: what is the role of product and process improvement?," International Journal of Entrepreneurial Venturing, Inderscience Enterprises Ltd, vol. 1(1), pages 5-21.
    34. Gunday, Gurhan & Ulusoy, Gunduz & Kilic, Kemal & Alpkan, Lutfihak, 2011. "Effects of innovation types on firm performance," International Journal of Production Economics, Elsevier, vol. 133(2), pages 662-676, October.
    35. Di Cintio, Marco & Ghosh, Sucharita & Grassi, Emanuele, 2017. "Firm growth, R&D expenditures and exports: An empirical analysis of italian SMEs," Research Policy, Elsevier, vol. 46(4), pages 836-852.
    36. Silviano Pérez & Amparo Llopis & Juan Llopis, 2004. "The Determinants of Survival of Spanish Manufacturing Firms," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(3), pages 251-273, August.
    37. Angela Triguero & David Córcoles & Maria Cuerva, 2014. "Persistence of innovation and firm’s growth: evidence from a panel of SME and large Spanish manufacturing firms," Small Business Economics, Springer, vol. 43(4), pages 787-804, December.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ioannis Giotopoulos & Alexander S. Kritikos & Aggelos Tsakanikas, 2022. "A Lasting Crisis affects R&D decisions of smaller firms: the Greek experience," CEPA Discussion Papers 49, Center for Economic Policy Analysis.
    2. Muhammad Bilal & Shafaq Chaudhry & Hina Amber & Muhammad Shahid & Shoaib Aslam & Khuram Shahzad, 2021. "Entrepreneurial Leadership and Employees’ Proactive Behaviour: Fortifying Self Determination Theory," JOItmC, MDPI, vol. 7(3), pages 1-15, July.
    3. Alfredo Grau & Araceli Reig, 2021. "Operating leverage and profitability of SMEs: agri-food industry in Europe," Small Business Economics, Springer, vol. 57(1), pages 221-242, June.
    4. Alfonso Exposito & Juan A. Sanchis-Llopis, 2020. "The effects of innovation on the decisions of exporting and/or importing in SMEs: empirical evidence in the case of Spain," Small Business Economics, Springer, vol. 55(3), pages 813-829, October.
    5. Roth Cardoso, Hugo Henrique & Dantas Gonçalves, Adriana & Dambiski Gomes de Carvalho, Gustavo & Gomes de Carvalho, Hélio, 2020. "Evaluating innovation development among Brazilian micro and small businesses in view of management level: Insights from the local innovation agents program," Evaluation and Program Planning, Elsevier, vol. 80(C).
    6. Nadežda Jankelová & Zuzana Joniaková & Juraj Mišún, 2021. "Innovative Work Behavior—A Key Factor in Business Performance? The Role of Team Cognitive Diversity and Teamwork Climate in This Relationship," JRFM, MDPI, vol. 14(4), pages 1-16, April.
    7. Carla Henriques & Clara Viseu & Maria Neves & Ana Amaro & Maria Gouveia & António Trigo, 2022. "How Efficiently Does the EU Support Research and Innovation in SMEs?," JOItmC, MDPI, vol. 8(2), pages 1-36, May.
    8. Sotiris Apostolopoulos & Ilias Makris & Stavros Stavroyiannis, 2022. "Healthcare Innovation in Greece: The Views of Private Health Entrepreneurs on Implementing Innovative Plans," JOItmC, MDPI, vol. 8(2), pages 1-15, April.
    9. Ida Farida & Doddy Setiawan, 2022. "Business Strategies and Competitive Advantage: The Role of Performance and Innovation," JOItmC, MDPI, vol. 8(3), pages 1-16, September.
    10. Alfonso Expósito & Amparo Sanchis-Llopis & Juan A. Sanchis-Llopis, 2022. "Manager gender, entrepreneurial orientation and SMEs export and import propensities: evidence for Spanish businesses," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 315-347, June.
    11. Ismael Cristofer Baierle & Guilherme Brittes Benitez & Elpidio Oscar Benitez Nara & Jones Luis Schaefer & Miguel Afonso Sellitto, 2020. "Influence of Open Innovation Variables on the Competitive Edge of Small and Medium Enterprises," JOItmC, MDPI, vol. 6(4), pages 1-17, December.
    12. Smith, Hannah & Discetti, Roberta & Bellucci, Marco & Acuti, Diletta, 2022. "SMEs engagement with the Sustainable Development Goals: A power perspective," Journal of Business Research, Elsevier, vol. 149(C), pages 112-122.
    13. HMJCB Heenkenda & Fengju Xu & KMMCB Kulathunga & WAR Senevirathne, 2022. "The Role of Innovation Capability in Enhancing Sustainability in SMEs: An Emerging Economy Perspective," Sustainability, MDPI, vol. 14(17), pages 1-22, August.
    14. Zahoor, Nadia & Donbesuur, Francis & Christofi, Michael & Miri, Domnan, 2022. "Technological innovation and employee psychological well-being: The moderating role of employee learning orientation and perceived organizational support," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    15. Nigel Driffield & Jun Du & Jan Godsell & Mark Hart & Katiuscia Lavoratori & Steven Roper & Irina Surdu & Wanrong Zhang, 2021. "Understanding productivity:Organisational Capital perspectives," Working Papers 013, The Productivity Institute.
    16. Alfonso Expósito & Amparo Sanchis-Llopis & Juan A. Sanchis-Llopis, 2021. "The effect of the manager gender on SMEs export and import decisions: Evidence for Spain," Working Papers 2115, Department of Applied Economics II, Universidad de Valencia.
    17. Sushil & Kamala Kannan Dinesh, 2022. "Structured Literature Review with TISM Leading to an Argumentation Based Conceptual Model," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 23(3), pages 387-407, September.
    18. Ramadani, Veland & Hisrich, Robert D. & Abazi-Alili, Hyrije & Dana, Léo-Paul & Panthi, Laxman & Abazi-Bexheti, Lejla, 2019. "Product innovation and firm performance in transition economies: A multi-stage estimation approach," Technological Forecasting and Social Change, Elsevier, vol. 140(C), pages 271-280.
    19. Huy-Cuong Vo-Thai & Trinh-Hoang Hong-Hue & My-Linh Tran, 2021. "Technological- and Non-Technological Innovation During the Growth Phase of Industry Life Cycle: An Evidence From Vietnamese Manufacturing Enterprises," SAGE Open, , vol. 11(3), pages 21582440211, July.
    20. Khoa T. Tran & Phuong V. Nguyen & Linh M. Nguyen, 2018. "The Role of Financial Slack, Employee Creative Self-Efficacy and Learning Orientation in Innovation and Organizational Performance," Administrative Sciences, MDPI, vol. 8(4), pages 1-32, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alfonso Expósito & Juan A. Sanchis-Llopis, 2019. "The relationship between types of innovation and SMEs’ performance: a multi-dimensional empirical assessment," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(2), pages 115-135, June.
    2. Alfonso Exposito & Juan A. Sanchis-Llopis, 2020. "The effects of innovation on the decisions of exporting and/or importing in SMEs: empirical evidence in the case of Spain," Small Business Economics, Springer, vol. 55(3), pages 813-829, October.
    3. Nuno Campos Pereira & Nuno Araújo & Leonardo Costa, 2016. "A counting multidimensional innovation index for SMEs," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.
    4. Domingo García Pérez-De-Lema & Peter Bent Hansen & Antonia Madrid-Gujjarro & Jane Lucia Silva-Santos, 2019. "INFLUENCE OF THE BUSINESS ENVIRONMENT IN THE DYNAMICS OF INNOVATION AND IN THE PERFORMANCE OF SMEs," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-25, June.
    5. Rubén Martínez-Alonso & María J. Martínez-Romero & Alfonso A. Rojo-Ramírez, 2019. "Examining the Impact of Innovation Forms on Sustainable Economic Performance: The Influence of Family Management," Sustainability, MDPI, vol. 11(21), pages 1-22, November.
    6. Peng Bin & Xiaolan Chen & Andrea Fracasso & Chiara Tomasi, 2020. "Firm employment growth in China: The role of marketization and regional economic factors," Growth and Change, Wiley Blackwell, vol. 51(1), pages 402-439, March.
    7. González-Fernández, Marcos & González-Velasco, Carmen, 2018. "Innovation and corporate performance in the Spanish regions," Journal of Policy Modeling, Elsevier, vol. 40(5), pages 998-1021.
    8. Ballestar, María Teresa & Díaz-Chao, Ángel & Sainz, Jorge & Torrent-Sellens, Joan, 2020. "Knowledge, robots and productivity in SMEs: Explaining the second digital wave," Journal of Business Research, Elsevier, vol. 108(C), pages 119-131.
    9. Flavio Calvino, 2016. "Technological Innovation and the Distribution of Employment Growth: a firm-level analysis," LEM Papers Series 2016/37, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Richard Harris & John Moffat, 2011. "R&D, Innovation and Exporting," SERC Discussion Papers 0073, Centre for Economic Performance, LSE.
    11. Nicolas Classen & Martin Carree & Anita Gils & Bettina Peters, 2014. "Innovation in family and non-family SMEs: an exploratory analysis," Small Business Economics, Springer, vol. 42(3), pages 595-609, March.
    12. Halima Jibril & Stephen Roper, 2022. "Of chickens and eggs: Exporting, innovation novelty and productivity," Working Papers 027, The Productivity Institute.
    13. Li, Xiaogang, 2020. "Innovation, market valuations, policy uncertainty and trade: Theory and evidence," ISU General Staff Papers 202001010800009179, Iowa State University, Department of Economics.
    14. Marco Capasso & Tania Treibich & Bart Verspagen, 2015. "The medium-term effect of R&D on firm growth," Small Business Economics, Springer, vol. 45(1), pages 39-62, June.
    15. Antonia Madrid-Guijarro & Dominique Philippe Martin & Domingo García-Pérez-de-Lema, 2021. "Capacity of open innovation activities in fostering product and process innovation in manufacturing SMEs," Review of Managerial Science, Springer, vol. 15(7), pages 2137-2164, October.
    16. Baumann, Julian & Kritikos, Alexander S., 2016. "The link between R&D, innovation and productivity: Are micro firms different?," Research Policy, Elsevier, vol. 45(6), pages 1263-1274.
    17. Graciela Corral de Zubielqui & Noel Lindsay & Wendy Lindsay & Janice Jones, 2019. "Knowledge quality, innovation and firm performance: a study of knowledge transfer in SMEs," Small Business Economics, Springer, vol. 53(1), pages 145-164, June.
    18. Burcu Fazlıoğlu & Başak Dalgıç & Ahmet Burçin Yereli, 2019. "The effect of innovation on productivity: evidence from Turkish manufacturing firms," Industry and Innovation, Taylor & Francis Journals, vol. 26(4), pages 439-460, April.
    19. Bagheri, Mahshid & Mitchelmore, Siwan & Bamiatzi, Vassiliki & Nikolopoulos, Konstantinos, 2019. "Internationalization Orientation in SMEs: The Mediating Role of Technological Innovation," Journal of International Management, Elsevier, vol. 25(1), pages 121-139.
    20. Giacomo Marzi & Lamberto Zollo & Andrea Boccardi & Cristiano Ciappei, 2018. "Additive Manufacturing in SMEs: Empirical Evidences from Italy," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 15(01), pages 1-22, February.

    More about this item


    innovation; business performance; multi-dimensional analysis; SME; Spain;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eec:wpaper:1805. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vicente Esteve (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.