Innovation in Smes: Barriers and facilitators

Nowadays innovation is an undeniable and strategic element for competitiveness although companies don't always reflect this belief in their levels of innovation. Spanish enterprises provide an excellent example of this trend considering that the statistics show that the level of innovation has improved but it is still a far cry from USA and Europe's results. The size of enterprises, mainly SMEs (95%) is one of the possible causes. However, it seems contradictory if the power of innovation is so widespread there is not a relationship in economic activities of different companies. It involves indentifying what the facilitators and barriers are that explain why enterprises don't undertake some innovation projects. Among the barriers to be considered: financial, management style, skills and knowledge or manpower. In relation to the facilitators in this study, corporate culture, communication processes and others aspects are analyzed. In this way, this paper focuses on detecting companies' framework and perception of innovation and accordingly proposing solutions to improve the level of innovation. The theoretical framework has been widely proven to show that innovation is a key factor in competitiveness in companies and in countries. The positive effects are not only economic. The influence extends to social and cultural environments. Thus, public policies are really important to enhance innovation. Large, medium and small businesses achieve better results thanks to innovation but SMEs have always been shown to achieve a lesser advantage. A lot of literature has tried to analyze the causes. Adaptive capacity is an advantage in SMEs but they have resistance to change related to their size, especially in relation to resources that are available. The main debate revolves around how barriers influence the level of innovation but unusual that researchers focus on facilitators. The combined analysis of the factors which motivate and discourage innovation is the most relevant contribution to this field. This study stands out, not only because of its scope, but also because of the direction of its analysis of innovation. Through this analysis the paper attempts to identify different groups of potential moderators. Therefore, this paper analyses the phenomenon from the perspective of perception, company characteristics, attitudes and the management model in SMEs. Data was collected from a total of 114 enterprises from southern Spain. A survey has been chosen as the quantitative research method. After the data is processed using Exploratory Factorial Analyses (AFE), as statistical techniques are more reliable for feeling the weight of each element, some mechanisms are proposed to give a guarantee of success. Additionally, this statistical method is recommended to describe the relationship between a large number of measured traits and a small number of unobserved factors. Factorial solution discovers the nature of the constructs (barriers and facilitators) influencing innovation in SMEs. Although the results are similar to those shown in the literature review some interesting influences are detected. The examination of the pattern of correlations between the observed measures in the sample highlight how the items are structured in respect to those of which are likely influenced by the same factors. According to the analysis the following barriers and facilitators are presented. Barriers: 1) related to innovation consequences, 2) barriers resulting from opportunity/cost of innovation, 3) perception of innovation, 4) barriers reflected in innovative capacity, 5) economic and cultural barriers, 6) lack of internal and external information and 7) knowledge barriers. On the other hand, the following facilitators are shown: 1) support of innovation (investment, qualified team, strategic innovation plan, culture...), 2) facilitator for innovation development (company's motivation and implication and person with competence and capabilities to lead innovation project, 3) internal organization, 4) Skills and knowledge facilitators, 5)fiscal facilitators and 6) communication facilitators both within and outside the company. Results are consistent with previous literature but the main contribution is a coherent structure for grouping all conditioning factors involved in innovation processes. It is only a starting point from which to evaluate which elements should be reinforced in innovation if companies want to achieve effective results. However, the sample size is the most important limitation in factorial analysis because communalities between variables are low and, in consequence, some factors are composed by a single variable. Anyway, this paper is a first approach to gain better perceptions and behaviours about innovation in SMEs. In the future, it would be interesting to extend the sample including SMEs from different geographical locations as well as to identify economic profiles regarding innovation. Additionally over time, barriers and facilitators should be considered as well as indentifying the effects on perception of innovation in economic crises. The findings in this research reveal that innovation is not affected by dimension or sector of activity, innovation level depends on certainty and abilities to assimilate this element as a method of management and development. In summary, the paper is supported by exhaustive analyses of the elements more relevant to the level of innovation in enterprises, especially SME's. Economic aspects are the most influential facilitators and barriers. Another interesting question is the reliance on public support to innovate in SMEs and the lack of financial ability to implement it. On the other hand, enterprises consider that their teams are qualified enough to develop innovation projects but their structures are insufficient, so they prioritize productivity and, in consequence, innovation is discouraged. Related to that, management teams accept their limitations in this strategic area and this becomes a cultural problem that influences negatively too. All the above is further aggravated by false beliefs about protection of innovation and non-collaborative behaviors. Concluding with the main findings, the concept of innovation is most probably a greater problem because many companies associate innovation with high technology and R&D only. However, innovation provides more options to improve and find competitive advantages. Finally, there are several practical implications for adopting strategic decisions in enterprises; moreover some recommendations are exposed for agents with competences in socioeconomic development. In this way, the proposal to minimize barriers and ideas to potentiate facilitators is made as well as some institutional actions which are detailed in this section. This package of proposals is useful for government decision-making bodies and their strategists to make plans and programmes that are aimed at supporting and encouraging innovation as the driving-force of the economy.