How does industry association impact micro and small enterprises’ innovation decisions? Evidence from China

ABSTRACT

Innovation is an important recovery strategy for Micro and small Enterprises (SMEs), which are expected to play an important role in the economic recovery and redevelopment in the post-epidemic era. We empirically explore how industry associations impact SMEs’ innovation decisions using China Micro and Small Enterprise Survey data. We find that industry associations’ information sharing support is possibly weakly dominant in promoting SMEs’ innovation decisions in general. The information-sharing support and institutional support are almost equally important for hard product or technical innovation, while industry associations’ information-sharing support weakly dominates institutional support for soft innovation. The most important channel for soft innovation in organization, services, marketing or culture is likely to introduce potential customers. We provide policy suggestions on how to guide industry associations to effectively help SMEs’ innovations.

KEYWORDS:

• Industry association
• Firm innovation
• innovation decision
• micro enterprises

JEL CLASSIFICATION:

• L25
• L52
• O14
• O32

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Please refer to Zhang, Wang, and Xiao (2022) for the detailed descriptions of CMES.

² Ranking of industries on percentage of SMEs with innovations are listed in Appendixes 6 and 7.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 72003067]; the Shanghai Municipal Foundation for Philosophy and Social Science [grant number 2018ECK007]; Pujiang Talent Program [grant number 18PJC033]; and Fundamental Research Funds for the Central Universities [grant number 2021QKT009, 2021ECNU- YYJ024]