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Determinants of Innovation Capability in Small UK Firms: An Empirical Analysis

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  • Henny Romijn and Manuel Albaladejo

Abstract

The paper is an empirical investigation of key internal and external sources of innovation capability in small and medium firms (SME) in the UK. An experimental measure of innovation capability is designed, which captures not merely the occurrence of innovations but also their scientific complexity and originality. The results obtained with this measure compare favourably to those obtained with more conventional statistics. A range of factors internal to firms are found to be relevant, including owners' technical education and prior working experience in large firms and R&D institutions, technical skills of the workforce, and investments in R&D and training. Significant external factors are: public financial support for R&D, and interaction with nearby R&D and training institutions. Although interaction with customers, suppliers and similar-oriented firms are more frequent than the former, there is no evidence that intensive linkages of this kind would be important for innovative capability. These findings do not support the thrust of current UK policy, which seeks to promote SME innovative performance through the formation of geographical clusters of firms in similar lines of business

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  • Henny Romijn and Manuel Albaladejo, "undated". "Determinants of Innovation Capability in Small UK Firms: An Empirical Analysis," QEH Working Papers qehwps40, Queen Elizabeth House, University of Oxford.
  • Handle: RePEc:qeh:qehwps:qehwps40
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    1. Cooke, Philip & Gomez Uranga, Mikel & Etxebarria, Goio, 1997. "Regional innovation systems: Institutional and organisational dimensions," Research Policy, Elsevier, vol. 26(4-5), pages 475-491, December.
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    4. Stewart, Frances & Ghani, Ejaz, 1991. "How significant are externalities for development?," World Development, Elsevier, vol. 19(6), pages 569-594, June.
    5. Rolf Sternberg, 1999. "Innovative Linkages and Proximity: Empirical Results from Recent Surveys of Small and Medium Sized Firms in German Regions," Regional Studies, Taylor & Francis Journals, vol. 33(6), pages 529-540.
    6. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-859, July.
    7. Robert Huggins, 1998. "Local Business Co-operation and Training and Enterprise Councils: The Development of Inter-firm Networks," Regional Studies, Taylor & Francis Journals, vol. 32(9), pages 813-826.
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    Cited by:

    1. Sanna PEKKOLA & Juhani UKKO, 2008. "Measuring the Effectiveness and Innovative Capability: Case Lahti University Consortium," European Financial and Accounting Journal, University of Economics, Prague, vol. 2008(3), pages 62-78.
    2. Tomi Tura & Vesa Harmaakorpi, 2005. "Measuring Regional Innovative Capability," ERSA conference papers ersa05p680, European Regional Science Association.
    3. Hervas-Oliver, Jose-Luis & Sempere-Ripoll, Francisca & Boronat-Moll, Carles, 2012. "Process innovation objectives and management complementarities: patterns, drivers, co-adoption and performance effects," MERIT Working Papers 051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. William Collier & Francis Green & Young-Bae Kim & John Peirson, 2011. "Education, Training and Economic Performance: Evidence from Establishment Survival Data," Journal of Labor Research, Springer, vol. 32(4), pages 336-361, December.
    5. Alexandra Goudi & Dimitris Skuras & Kyriaki Tsegenidi, 2003. "Innovation and Business Performance in Rural and Peripheral Areas of Greece," ERSA conference papers ersa03p337, European Regional Science Association.
    6. José Albors-Garrigos & José L. Hervas-Oliver, 2011. "Making sense of innovation by R&D and non-R&D innovators in low technology contexts: a forgotten lesson for policymakers," Working Papers. Serie EC 2011-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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