Barriers to Innovation among Spanish Manufacturing SMEs

Abstract

Innovation is widely recognized as a key factor in the competitiveness of nations and firms. Small firms that do not embrace innovation within their core business strategy run the risk of becoming uncompetitive because of obsolete products and processes. Innovative firms are a perquisite for a dynamic and competitive economy.

This paper reports on the results of a study that examined barriers to firm innovation among a sample of 294 managers of small and medium‐sized enterprises (SMEs) in Spain. The study examined the relation between (1) product, process, and management innovation and (2) 15 obstacles to innovation, which can limit a firm's ability to remain competitive and profitable. Findings of the study show that barriers have a differential impact on the various types of innovation; product, process, and management innovation are affected differently by the different barriers. The most significant barriers are associated with costs, whereas the least significant are associated with manager/employee resistance. Additionally, the results demonstrate that the costs associated with innovation have proportionately greater impact on small than on larger firms.

The findings can be used in the development of public policy aimed at supporting and encouraging the innovation among SMEs in Spain. Government policies that encourage and support innovation among all firms, especially small firms, can help countries remain competitive in a global market. Public policy that encourages innovation can enable firms to remain competitive and survive, both of which have direct implications for employment and a country's economic viability. The results may also be insightful for managers who are attempting to encourage innovation. Understanding barriers can assist managers in fostering an innovative culture by supporting new ideas or by avoiding an attitude that creates resistance to new ideas.

Notes

1 The Instituto de Fomento de la Región de Murcia is the development agency of the Murcia region. It is a public institution that belongs to the Economy, Firm and Innovation Minister. Its main aim is to foster regional wealth, employment, and economic development through policies that support SMEs and associated development activities in order to improve regional economic competitiveness.

Additional information

Notes on contributors

Antonia Madrid‐guijarro

Antonia Madrid‐Guijarro is an assistant professor at the Business Faculty. She participates as researcher in the SMEs Economic Observatory in the Murcia Region. She has a Ph.D. (2004) in economics from the Politechnical University of Cartagena. Her main research interests are innovation, firm performance, policy implications, and business failure.

Domingo Garcia

Domingo García‐Pérez‐de‐Lema is Head of Accounting and Finance Department in the Politechnical University of Cartagena, and Coordinator of SMEs Economic Observatory in the Murcia region (Spain). He holds a Ph.D. (1988) in economics from the Murcia University. His main research focus is SMEs, with especial interest in innovation, financing, regional economics, and managerial control systems.

Howard Van auken

Howard Van Auken is a University professor of management at Iowa State University. He has a Ph.D. in Finance (1980). His research interests are in the area of small firm innovation and finance.