Innovation in large versus small companies: insights from the US wood products industry

Abstract

Purpose

Aims to explain the effect of firm size on company innovation inside one industry context: the wood products industry.

Design/methodology/approach

The strategic issues under study (innovation, corporate strategy) are typically managed by the firm's top executives. Also important is the fact that the response rates of questionnaires targeting this group are generally very low. Consistently, the data for the project were obtained from 43 in‐person interviews with top executives of wood products companies of different sizes in two countries, i.e. the USA and Chile.

Findings

Finds that firm size does impact the innovation type pursued by companies, at least in the wood products industry. Indeed, large companies of this study clearly outrun smaller companies in process innovation. However, our analysis also shows that small companies level the field with larger companies when considering all three innovation types (process, product, business systems).

Practical implications

The capital enjoyed by large companies allows them to excel in process innovation. This article suggests that managers of small companies should compete in a different arena from large companies and emphasize product and business systems innovation, as they can do very well in these areas even with limited resources.

Originality/value

There is very little research about innovation in the wood products industry. This article contributes to the knowledge in this area, also providing new insights about the validity of Schumpeter's assertions regarding the role of company size in innovation.

Citation

Wagner, E.R. and Hansen, E.N. (2005), "Innovation in large versus small companies: insights from the US wood products industry", Management Decision, Vol. 43 No. 6, pp. 837-850. https://doi.org/10.1108/00251740510603592