Innovation types and performance in growing UK SMEs

Abstract

Purpose: The objective of this study is to explore the types of innovation that are predominant in UK SMEs, whether they are predominantly radical or incremental, and to investigate the impact of these innovations on performance. Design/methodology/approach: A web‐based survey instrument was used to administer survey questionnaires to a sample of UK SMEs in manufacturing, engineering, electronics, information technology and telecommunications industries. The response rate was 13.8 percent. Relevant statistical analytical techniques including regression for analysis was then used. Findings: It is found that the SMEs tend to focus more on incremental than radical innovations and that this focus is related to growth in sales turnover. Practical implications: It is not such a bad idea for SMEs, particularly those operating in high technological industries, to focus on incremental innovations as these are actually related positively to sales turnover growth. Originality/value: An investigation of the types of innovation that SMEs pursue is pioneering in the field as previous studies of this type have been based on large firms. The contention that the raison d'etre of SMEs is to develop radical innovations is not supported empirically, at least for the sample of SMEs. In addition, it is found that the age of an SME is not related to its focus on either incremental or radical innovation. These are the contributions of this paper.