Types of innovation, sources of information and performance in entrepreneurial SMEs

Abstract

Purpose: The purpose of this paper is to examine the information sourcing practices of small‐ to medium‐sized enterprises (SMEs) associated with the development of different types of innovation (product/process/market/organizational). The relationship between different types of innovation and firms' performance is also to be examined. Design/methodology/approach: The paper is based on a quantitative study of a sample of SMEs located in the Northern Savo region in Finland. The entrepreneurs completed a questionnaire pertaining to, for example, whether their firms had introduced novel innovations and what were the sources of information behind these innovations. Findings: The introduction of novel product and market innovations appears to be associated with the use of more or less freely accessible information sources. The findings also indicate that the introduction of novel product, process and market innovations is positively associated with firms' growth. None of the types of innovation studied was found to have a positive relationship with firms' profitability. Research limitations/implications: As the analysis was based on self‐reported data provided by the entrepreneurs of SMEs, the authors had to rely on their judgment regarding the novelty of the innovations they had introduced. Moreover, as the study was conducted in a single region with its idiosyncratic features, the generalizability of the findings to other regional contexts remains somewhat ambiguous. Practical implications: The study suggests a need to re‐evaluate the innovation‐related services available to firms in the regional innovation system. The findings also imply the need for entrepreneurs and their firms to upgrade their competences in order to enhance their innovation and networking capabilities. Originality/value: Relatively modest amounts of research have addressed the information sourcing practices of SMEs in relation to different types of innovation, both in terms of the object of change and the extent of change. The paper addresses this.