IDEAS home Printed from https://ideas.repec.org/p/era/wpaper/dp-2014-10.html
   My bibliography  Save this paper

Constraints, Determinants of SME Innovation, and the Role of Government Support

Author

Listed:
  • OUM Sothea

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Narjoko Dionisius

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Charles HARVIE

    (Centre for Small Business and Regional Research School of Economics, University of Wollongong, Australia)

Abstract

This paper provides an empirical analysis of potential constraints to SMEs upgrading their capability to innovate, and assesses the effectiveness of government support in overcoming these constraints. The justification for government support is that market failures can hinder SMEs’ access to information, finance, technology, and human resources. This paper focuses on the impact of the perceived effectiveness of government support through business development services in terms of providing: (i) training; (ii) counselling and advice; (iii) technology development and transfer; (iv) information; (v) business linkages; (vi) financing; and (vii) a conducive business environment. The effectiveness of this support is evaluated against the ability of SMEs to innovate.

Suggested Citation

  • OUM Sothea & Narjoko Dionisius & Charles HARVIE, 2014. "Constraints, Determinants of SME Innovation, and the Role of Government Support," Working Papers DP-2014-10, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2014-10
    as

    Download full text from publisher

    File URL: http://www.eria.org/ERIA-DP-2014-10.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Teece, David J., 2010. "Technological Innovation and the Theory of the Firm," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 679-730, Elsevier.
    2. Lee, Sungjoo & Park, Gwangman & Yoon, Byungun & Park, Jinwoo, 2010. "Open innovation in SMEs--An intermediated network model," Research Policy, Elsevier, vol. 39(2), pages 290-300, March.
    3. Bertschek, I., 1995. "How to Stay in The Market? - Products and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment," SFB 373 Discussion Papers 1995,7, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    4. Love, James H. & Ganotakis, Panagiotis, 2013. "Learning by exporting: Lessons from high-technology SMEs," International Business Review, Elsevier, vol. 22(1), pages 1-17.
    5. Bertschek, Irene, 1995. "Product and Process Innovation as a Response to Increasing Import and Foreign Direct Investment," Journal of Industrial Economics, Wiley Blackwell, vol. 43(4), pages 341-357, December.
    6. Tomohiro Machikita & Yasushi Ueki, 2011. "Innovation in Linked and Non-linked Firms: Effects of Variety of Linkages in East Asia," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 3(1), pages 77-102, April.
    7. Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107, Elsevier.
    8. Romijn, Henny & Albaladejo, Manuel, 2002. "Determinants of innovation capability in small electronics and software firms in southeast England," Research Policy, Elsevier, vol. 31(7), pages 1053-1067, September.
    9. Robert D. Dewar & Jane E. Dutton, 1986. "The Adoption of Radical and Incremental Innovations: An Empirical Analysis," Management Science, INFORMS, vol. 32(11), pages 1422-1433, November.
    10. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    11. Allred, Brent B. & Park, Walter G., 2007. "The influence of patent protection on firm innovation investment in manufacturing industries," Journal of International Management, Elsevier, vol. 13(2), pages 91-109, June.
    12. Maria Guadalupe & Olga Kuzmina & Catherine Thomas, 2012. "Innovation and Foreign Ownership," American Economic Review, American Economic Association, vol. 102(7), pages 3594-3627, December.
    13. Charles HARVIE & Dionisius NARJOKO & Sothea OUM, 2010. "Firm Characteristic Determinants of SME Participation in Production Networks," Working Papers DP-2010-11, Economic Research Institute for ASEAN and East Asia (ERIA).
    14. Vincenzo Spiezia, 2011. "Are ICT Users More Innovative?: an Analysis of ICT-Enabled Innovation in OECD Firms," OECD Journal: Economic Studies, OECD Publishing, vol. 2011(1), pages 1-21.
    15. Sanjaya Lall, 2013. "Reinventing Industrial Strategy: The Role Of Government Policy In Building Industrial Competitiveness," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 785-829, November.
    16. Jeroen de Jong & Patrick Vermeulen, 2004. "Determinants of product innovation in small firms: A Comparison Across Industries," Scales Research Reports N200410, EIM Business and Policy Research.
    17. Dahlman, Carl J. & Ross-Larson, Bruce & Westphal, Larry E., 1987. "Managing technological development: Lessons from the newly industrializing countries," World Development, Elsevier, vol. 15(6), pages 759-775, June.
    18. Vega-Jurado, Jaider & Gutiérrez-Gracia, Antonio & Fernández-de-Lucio, Ignacio & Manjarrés-Henri­quez, Liney, 2008. "The effect of external and internal factors on firms' product innovation," Research Policy, Elsevier, vol. 37(4), pages 616-632, May.
    19. Tomohiro MACHIKITA & Masatsugu TSUJI & Yasushi UEKI, 2010. "How ICTs Raise Manufacturing Performance: Firm-level Evidence in Southeast Asia," Working Papers DP-2010-07, Economic Research Institute for ASEAN and East Asia (ERIA).
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Muñoz-Sepúlveda, Jesús A., 2017. "Restricciones de capacidad, exportación e I+D: Un análisis empírico con datos de empresas manufactureras españolas/Capacity Constraints, Exports and R&D: An Empirical Analysis with Data of Spanish Man," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 35, pages 133-152, Enero.
    2. Peter Njiraini & Paul Gachanja & Jacob Omolo, 2018. "Factors influencing micro and small enterprise’s decision to innovate in Kenya," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 8(1), pages 1-9, 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. A. Lasagni, 2011. "European SMEs, external relationships and innovation: some empirical evidence," Economics Department Working Papers 2011-EP04, Department of Economics, Parma University (Italy).
    2. Idris, Bochra & Saridakis, George & Khan, Zaheer, 2022. "The Effect of Outward and Inward Internationalisation on Different Types of Innovation: Evidence from UK SMEs," Journal of International Management, Elsevier, vol. 28(2).
    3. Kornelius Kraft & Jörg Stank & Ralf Dewenter, 2011. "Co-determination and innovation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(1), pages 145-172.
    4. Juan M. Gallego & Luis H. Gutiérrez & Sang H. Lee, 2015. "A firm-level analysis of ICT adoption in an emerging economy: evidence from the Colombian manufacturing industries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(1), pages 191-221.
    5. Zhenzhen Xie & Jiatao Li, 2018. "Exporting and innovating among emerging market firms: The moderating role of institutional development," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 222-245, February.
    6. Artés, Joaquín, 2009. "Long-run versus short-run decisions: R&D and market structure in Spanish firms," Research Policy, Elsevier, vol. 38(1), pages 120-132, February.
    7. Nabil Abou Lebdi,, 2015. "Radical Innovation – A domain of SMEs? A novel test of the Schumpeterian Hypothesis," DEM Discussion Paper Series 15-04, Department of Economics at the University of Luxembourg.
    8. Zouhour Karray & Mohamed Kriaa, 2009. "Innovation and R&D Investment of Tunisian Firms: A Two-Regime Model with Selectivity Correction," Working Papers 484, Economic Research Forum, revised Apr 2009.
    9. Lee, Chang-Yang, 2009. "Competition favors the prepared firm: Firms' R&D responses to competitive market pressure," Research Policy, Elsevier, vol. 38(5), pages 861-870, June.
    10. Rajeev K. Goel, 2023. "Seek foreign funds or technology? Relative impacts of different spillover modes on innovation," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1466-1488, August.
    11. Verhoeven, Dennis & Bakker, Jurriën & Veugelers, Reinhilde, 2016. "Measuring technological novelty with patent-based indicators," Research Policy, Elsevier, vol. 45(3), pages 707-723.
    12. Çağatay Bircan & Ralph De Haas, 2020. "The Limits of Lending? Banks and Technology Adoption across Russia," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 536-609.
    13. Tarighi, Sina & Shavvalpour, Saeed, 2021. "Technological development of E&P companies in developing countries: An integrative approach to define and prioritize customized elements of technological capability in EOR," Resources Policy, Elsevier, vol. 72(C).
    14. Dziallas, Marisa & Blind, Knut, 2019. "Innovation indicators throughout the innovation process: An extensive literature analysis," Technovation, Elsevier, vol. 80, pages 3-29.
    15. Derya Fındık & Aysıt Tansel, 2013. "Intangible investment and Technical efficiency: The case of software-intensive manufacturing firms in Turkey," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 235, Ekonomik Yaklasim Association.
    16. Fındık, Derya & Beyhan, Berna, 2014. "A Perceptual Measure of Innovation Performance: Micro Level Evidence from Turkey," MPRA Paper 60961, University Library of Munich, Germany.
    17. Döhrn, Roland & Engel, Dirk & Stiebale, Joel, 2008. "Außenhandel und ausländische Direktinvestitionen deutscher Unternehmen," Studien zum deutschen Innovationssystem 3-2008, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    18. Ahmet Faruk Aysan & Luis Carlos Castillo-Téllez & Dilek Demirbas & Mustafa Disli, 2021. "Foreign Trade, Education, And Innovative Performance: A Multilevel Analysis," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(3), pages 413-440, September.
    19. Andrea Orame & Daniele Pianeselli, 2023. "Thinking the green transition: evidence from the automotive industry," Questioni di Economia e Finanza (Occasional Papers) 767, Bank of Italy, Economic Research and International Relations Area.
    20. Paulo Bastos & Odd Rune Straume, 2012. "Globalization, product differentiation, and wage inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 857-878, August.

    More about this item

    Keywords

    : SMEs; constraints; innovation; government support; and developing Asia.;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:era:wpaper:dp-2014-10. See general information about how to correct material in RePEc.

    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: Ranti Amelia (email available below). General contact details of provider: https://edirc.repec.org/data/eriadid.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.