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Unformatted text preview: Organisational innovation in SMEs The importance of strategic orientation and competitive structure H. Salavou, G. Baltas and S. Lioukas Athens University of Economics and Business, Athens, Greece Keywords Organizational innovation, Small to medium-sized enterprises, Strategic alignment, Competitive strategy, Poisson distribution, Greece Abstract This study considers determinants of organisational innovation in small to medium-sized enterprises (SMEs), as expressed by the number of product innovation adoptions. Drawing upon data from 150 manufacturing firms in Greece, the study attempts to identify the importance of strategic orientation and competitive structure. First, strategy-driven characteristics, such as market orientation and learning, are shown to increase SMEs innovative performance. Second, competition-related characteristics, and in particular industry concentration and barriers to entry, appear to have significant effects on SMEs innovative activity. Overall, the empirical findings suggest that market- and learning-oriented SMEs facing strong competition tend to be more innovative. These results are discussed in the context of Greek SMEs in food, beverages and textile sectors, taking into account the specific conditions prevailing. Apart from providing some new evidence in the important area of SMEs, this study has also important implications for managers and policy makers while revealing considerable scope for further research. Introduction This paper focuses on the impact of important aspects of the strategic and competitive posture of small to medium-sized enterprises (SMEs) on organisational innovation. Much of existing research on the determinants of innovation was aimed at identifying the impact of firm-specific characteristics on innovation and/or the effect of external environment (Capon et al. , 1992; Fritz, 1989; Kraft, 1989; Wolfe, 1994). Most work on this research stream, however, placed emphasis on the effects of structural factors which are more appropriate for large firms (Damanpour, 1988, 1991; Kim, 1980; Kimberly and Evanisko, 1981). Fewer studies have considered the effects of strategic orientation such as closeness to customers, learning and flexibility, which are received as advantages of SMEs. Furthermore, empirical evidence in existing studies draws mainly from samples of large firms in advanced countries, such as the USA, Japan, UK, Germany, etc. Despite the increasing globalisation and the growing relevance of other economies, few studies have appeared in the literature utilising data from smaller countries in various stages of development. This raises important questions on the transferability of conclusions across national settings. Many researchers (Calvert et al. , 1996; Hofstede, 1991; Janssens et al. , 1995; Nejad, 1997; Porter, 1990; White, 1988) suggest that using the findings of innovation studies in advanced countries to explain the innovative behaviour in less developed countries is likely to be inappropriate. This line of thinkingbehaviour in less developed countries is likely to be inappropriate....
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