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Importance of Technological Innovation for SME Growth: Evidence from India

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  • Bala Subrahmanya, M. H.
  • Mathirajan, M.
  • Krishnaswamy, K. N.

Abstract

This paper probes the drivers, dimensions, achievements, and outcomes of technological innovations carried out by SMEs in the auto components, electronics, and machine tool sectors of Bangalore in India. Further, it ascertains the growth rates of innovative SMEs vis-à-vis non-innovative SMEs in terms of sales turnover, employment, and investment. Thereafter, it probes the relationship between innovation and growth of SMEs by (i) estimating a correlation between innovation sales and sales growth, (ii) calculating innovation sales for high, medium, and low growth innovative SMEs and doing a aggregate one-way ANOVA, and (iii) ascertaining the influence of innovation sales, along with investment growth and employment growth on gross value-added growth by means of multiple regression analysis. The paper brings out substantial evidence to argue that innovations of SMEs contributed to their growth.

Suggested Citation

  • Bala Subrahmanya, M. H. & Mathirajan, M. & Krishnaswamy, K. N., 2010. "Importance of Technological Innovation for SME Growth: Evidence from India," WIDER Working Paper Series 003, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2010-03
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    References listed on IDEAS

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    1. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, January.
    2. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
    3. Rick Delbridge & Tim Edwards & Max Munday, 2001. "Linking Innovative Potential to SME Performance: An Assessment of Enterprises in Industrial South Wales," ERSA conference papers ersa01p135, European Regional Science Association.
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    Cited by:

    1. repec:ssi:jouesi:v:3:y:2016:i:4:p:307-318 is not listed on IDEAS
    2. Erind Hoti & Gentian Hoxhalli, 2015. "From demand-pull and technology-push innovations, towards knowledge-based innovation systems. Evidence from Albanian small and medium enterprises," Proceedings of International Academic Conferences 2805365, International Institute of Social and Economic Sciences.

    More about this item

    Keywords

    Technological innovations; sales growth; auto components; electronics; machine tools; Bangalore;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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