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Perceived Environmental Uncertainty and Innovation in Small Firms

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  • Mark Freel

Abstract

Employing data, from a recent survey of Scottish and Northern English Small- and Medium-sized Enterprises (SMEs), the current paper provides new evidence of the extent to which perceptions of environmental uncertainty (dynamism, complexity and hostility), along a number of dimensions, discriminate between small firms engaged in various levels of product innovation. Drawing, broadly, upon an extended version of the classic Miles and Snow schema, novel innovators appear to be marked by perceptions of uncertainty in market and technological environments, but by perceptions of a relatively certain or benign competitive environment. Moreover, the paper observes some dissimilarities between manufacturing and service firms. For instance, higher levels of innovation in manufacturing firms are associated with higher perceptions of supplier uncertainty, whilst, higher levels of innovation in service firms are associated with higher perceptions of human resource uncertainty. Copyright Springer 2005

Suggested Citation

  • Mark Freel, 2005. "Perceived Environmental Uncertainty and Innovation in Small Firms," Small Business Economics, Springer, vol. 25(1), pages 49-64, August.
    • Handle: RePEc:kap:sbusec:v:25:y:2005:i:1:p:49-64
    DOI: 10.1007/s11187-005-4257-9
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    References listed on IDEAS

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    1. Oerlemans, L. A.G. & Buys, A.J. & Pretorius, M.W., 2001. "Research Design for the South African Innovation Survey 2001," Working Papers 01.02, Eindhoven Center for Innovation Studies.
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    More about this item

    Keywords

    environmental uncertainty; innovation; small firms; D81; L21; O32; M13;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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