Fueling Innovation through Information Technology in SMEs^*

* The authors wish to thank Don Neubaum and the anonymous reviewers for their helpful comments and direction. Financial support was provided by the Austin Family Business Program in the College of Business at Oregon State University.

Abstract

This paper describes a study that investigates the mediating effects of information technology (IT) on the relationships among product and process innovations and firm performance (measured in multiple profitability and growth rate metrics). Using structural equation modeling on a sample of 397 small and medium‐sized enterprises (SMEs), we find evidence that (1) increases on the strategic emphasis placed on innovation, both product and process, positively impact the prominence managers place on IT; (2) the impact of innovation (both product and process) on performance (both profitability and growth) is primarily indirect, felt via the mechanism of the importance managers place on IT; and (3) an increased emphasis on IT abets managers' perception of their firms' performance, as compared with that observed among peer firms (other SMEs).

* The authors wish to thank Don Neubaum and the anonymous reviewers for their helpful comments and direction. Financial support was provided by the Austin Family Business Program in the College of Business at Oregon State University.

* The authors wish to thank Don Neubaum and the anonymous reviewers for their helpful comments and direction. Financial support was provided by the Austin Family Business Program in the College of Business at Oregon State University.

Notes

* The authors wish to thank Don Neubaum and the anonymous reviewers for their helpful comments and direction. Financial support was provided by the Austin Family Business Program in the College of Business at Oregon State University.

Additional information

Notes on contributors

Clay Dibrell

Clay Dibrell is associate professor of strategic management in the College of Business at Oregon State University and research fellow at Bond University.

Peter S. Davis

Peter S. Davis is professor and chair of the Department of Management in the Belk College of Business at the University of North Carolina–Charlotte.

Justin Craig

Justin Craig is associate professor of family business and entrepreneurship at Bond University.