Innovation in SMEs: the impact of strategic orientation and environmental perceptions

Nicholas O'Regan (Centre for Interdisciplinary Strategic Management Research, Middlesex University Business School, London, UK)
Abby Ghobadian (Centre for Interdisciplinary Strategic Management Research, Middlesex University Business School, London, UK)

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Publication date: 1 March 2005

Abstract

Purpose

To investigate the role and impact of strategic orientation and environmental perceptions on innovation and supporting mechanisms such as process technologies and management practices, in SMEs.

Design/methodology/approach

A quantitative approach based on a random sampling methodology of 1,000 SMEs. Construct validity was tested in the qualitative phase of the research.

Findings

SMEs can be categorised as either prospectors or defenders. This polarisation was confirmed in this study. For example, prospectors are more likely to engage in new product development, whereas defenders are five times more likely to modify an existing product than introduce a newly patented product. Prospector‐type firms tend to deploy more new process technologies and leading management practices compared with defender type firms, particularly in a turbulent operating environment. Defenders recognise the need to “catch up” and indicate that they intend to introduce process technologies over the next two years. Firms tend to place a greater emphasis on innovation in turbulent operating environments.

Research limitations/implications

The study was restricted to two different sector types: engineering and electronics. Future studies should examine other sectors and their sub sectors, possibly augmented by qualitative in‐depth case studies or an ethnographic approach.

Practical implications

The practical implications of the study are outlined in the paper. Chief executives are encouraged to align their strategic orientation with their innovation strategy. In addition, defender type firms should consider the greater use of process technologies and management practices.

Originality/value

This paper contributes to the integration of strategic orientation and innovation.

Keywords

Citation

O'Regan, N. and Ghobadian, A. (2005), "Innovation in SMEs: the impact of strategic orientation and environmental perceptions", International Journal of Productivity and Performance Management, Vol. 54 No. 2, pp. 81-97. https://doi.org/10.1108/17410400510576595

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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