Innovative characteristics of small manufacturing firms

The purpose of the paper is two‐fold: one, to focus on a specific industry – the manufacturing industry. In response to recent criticisms research in small to medium‐sized enterprises (SME) is not sector/industry‐specific, consequently the advice for these companies was too general and not of any particular help. Two, the research addresses innovation management in terms of the interrelationship among the three elements of a business: product, process and ways of working, which were often explored in isolation in the literature. Similarly, a definition of innovation was established and a systematic approach to company innovativeness was adopted.

A survey of 1000 West‐Midlands‐based manufacturing SMEs (SMMEs) was conducted. Ten indicators were used to measure company innovativeness. The top 20 per cent firms were compared with bottom 80 per cent firms in terms of product innovation management, process and work organisation. Means of responses were compared for two sets of companies. T‐tests were performed to draw some conclusions on the results. Discriminant analysis was used to determine the factors distinguishing more and less innovative companies.

The results showed SMEs in the manufacturing industry are similar to SMEs in other industries. The drivers of SMME innovativeness were: market anticipation, customer focus and commitment of CEO/owners in NPD, processes and new ways of working. Innovation was part of the business strategy and goal‐oriented. However, innovation in SMME was based more around developing new ways of working than new product innovations. The use of systems/technology and process innovation was not uniform amongst more and less innovative companies. The main constraints of SMMEs were customer dependency, skills and knowledge acquisition through training, poor learning attitude and networking because of their tradition of being insular and autonomous.

The paper provides useful information on innovation management in small manufacturing firms.