growth rates vary different sizes in Hicks, 2008; between firms, the manufacturing International regions and nations. industry, Small & Finance Therefore, Medium Corporation, 2010). technological Enterprises That is why, small innovation is (hereafter SMEs) firms are alleged to considered as the including start-ups, be the seedbed of prime factor of have the unrealized the new initiatives economic change. potential for from which will Technological innovation emerge the innovation is the (Chaminade and successful ultimate source of Van-Lauridsen, businesses and productivity and 2006). This is industries of the growth, and it is the because SMEs by future (Beesley and only proven way for their very nature are Hamilton, 1984). economies to more flexible, Given these, it is consistently get better adaptable and important to ahead (Solow, receptive, have understand the 1987). efficient internal following issues: communication, Among different What is simple technological sectors of an organizational innovation? economy, structure and What factors manufacturing effective determine industry sector has among technological helped to drive others, which are innovation? economic growth some of the What are the and rising living “imperative pre-requisites standards for nearly qualities” for for SME three centuries and undertaking innovations? continues to do so innovations How do in developing (Harrison and innovations countries even now Watson, 1998). benefit SMEs? (McKinsey Global What is more Institute, 2012). In How to significant is that, fact, it is the promote there is empirical manufacturing innovations in evidence to show sector which has the Indian SME that a number of been always at the sector? SMEs in wide forefront of varieties of sectors These issues are accelerating elaborated in the across countries do economic growth engage in following four and transforming different sections of technological economic structure innovations, which this article. of nations through play a crucial role Technological innovation and in enhancing their Innovation: productivity economic Meaning and growth. Thus, the performance Importance stimuli for (Hoffman, et al, innovation and Technological 1998). Small firms productivity growth innovation is a are considered led competitiveness concept that is more efficient at emerges from the sufficiently performing manufacturing complex, innovative activities industry (McKinsey and and are, in fact, the Global Institute, impossible to major source of 2012). measure directly innovations (Hansen, 2001). (Breitzman and Among firms of
growth rates vary between firms, regions and nations. Therefore, technological innovation is considered as the prime factor of economic change. Technological innovation is the ultimate source of productivity and growth, and it is the only proven way for economies to consistently get ahead (Solow, 1987). Among different sectors of an economy, manufacturing industry sector has helped to drive economic growth and rising living standards for nearly three centuries and continues to do so in developing countries even now (McKinsey Global Institute, 2012). In fact, it is the manufacturing sector which has been always at the forefront of accelerating economic growth and transforming economic structure of nations through innovation and productivity growth. Thus, the stimuli for innovation and productivity growth led competitiveness emerges from the manufacturing industry (McKinsey Global Institute, 2012). Among firms of different sizes in the manufacturing industry, Small & Medium Enterprises (hereafter SMEs) including start-ups, have the unrealized potential for innovation (Chaminade and Van-Lauridsen, 2006). This is because SMEs by their very nature are more flexible, better adaptable and receptive, have efficient internal communication, simple organizational structure and effective among others, which are some of the “imperative qualities” for undertaking innovations (Harrison and Watson, 1998). What is more significant is that, there is empirical evidence to show that a number of SMEs in wide varieties of sectors across countries do engage in technological innovations, which play a crucial role in enhancing their economic performance (Hoffman, et al, 1998). Small firms are considered more efficient at performing innovative activities and are, in fact, the major source of innovations (Breitzman and Hicks, 2008; International Finance Corporation, 2010). That is why, small firms are alleged to be the seedbed of the new initiatives from which will emerge the successful businesses and industries of the future (Beesley and Hamilton, 1984). Given these, it is important to understand the following issues: What is technological innovation? What factors determine technological innovation? What are the pre-requisites for SME innovations? How do innovations benefit SMEs? How to promote innovations in the Indian SME sector? These issues are elaborated in the following four different sections of this article. Technological Innovation: Meaning and Importance Technological innovation is a concept that is sufficiently complex, and impossible to measure directly (Hansen, 2001).
SEEDBED-OF-NEW-INITIATIVES-1.docx