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Determinants of Innovation Capability in Small UK Firms: An Empirical Analysis

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  • Henny Romijn and Manuel Albaladejo

Abstract

The paper is an empirical investigation of key internal and external sources of innovation capability in small and medium firms (SME) in the UK. An experimental measure of innovation capability is designed, which captures not merely the occurrence of innovations but also their scientific complexity and originality. The results obtained with this measure compare favourably to those obtained with more conventional statistics. A range of factors internal to firms are found to be relevant, including owners' technical education and prior working experience in large firms and R&D institutions, technical skills of the workforce, and investments in R&D and training. Significant external factors are: public financial support for R&D, and interaction with nearby R&D and training institutions. Although interaction with customers, suppliers and similar-oriented firms are more frequent than the former, there is no evidence that intensive linkages of this kind would be important for innovative capability. These findings do not support the thrust of current UK policy, which seeks to promote SME innovative performance through the formation of geographical clusters of firms in similar lines of business

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  • Henny Romijn and Manuel Albaladejo, "undated". "Determinants of Innovation Capability in Small UK Firms: An Empirical Analysis," QEH Working Papers qehwps40, Queen Elizabeth House, University of Oxford.
    • Handle: RePEc:qeh:qehwps:qehwps40
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    Cited by:

    1. José Albors-Garrigos & José L. Hervas-Oliver, 2011. "Making sense of innovation by R&D and non-R&D innovators in low technology contexts: a forgotten lesson for policymakers," Working Papers. Serie EC 2011-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Sanna Pekkola & Juhani Ukko, 2008. "Measuring the Effectiveness and Innovative Capability: Case Lahti University Consortium," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2008(3), pages 62-78.
    3. Jose-Luis Hervas-Oliver & Francisca Ripoll-Sempere & Carles Boronat Moll, 2016. "Does management innovation pay-off in SMEs? Empirical evidence for Spanish SMEs," Small Business Economics, Springer, vol. 47(2), pages 507-533, August.
    4. repec:ipt:iptwpa:jrc85346 is not listed on IDEAS
    5. Fatas-Villafranca, Francisco & Jarne, Gloria & Sanchez-Choliz, Julio, 2009. "Industrial leadership in science-based industries: A co-evolution model," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 390-407, October.
    6. Jose-Luis Hervas-Oliver & Jose Albors-Garrigos & Blanca de-Miguel & Antonio Hidalgo, 2012. "The role of a firm's absorptive capacity and the technology transfer process in clusters: How effective are technology centres in low-tech clusters?," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 24(7-8), pages 523-559, September.
    7. Tomi Tura & Vesa Harmaakorpi, 2005. "Measuring Regional Innovative Capability," ERSA conference papers ersa05p680, European Regional Science Association.
    8. William Collier & Francis Green & Young-Bae Kim & John Peirson, 2011. "Education, Training and Economic Performance: Evidence from Establishment Survival Data," Journal of Labor Research, Springer, vol. 32(4), pages 336-361, December.
    9. Hervas-Oliver, Jose-Luis & Sempere-Ripoll, Francisca & Boronat-Moll, Carles, 2012. "Process innovation objectives and management complementarities: patterns, drivers, co-adoption and performance effects," MERIT Working Papers 2012-051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Alexandra Goudi & Dimitris Skuras & Kyriaki Tsegenidi, 2003. "Innovation and Business Performance in Rural and Peripheral Areas of Greece," ERSA conference papers ersa03p337, European Regional Science Association.
    11. Jose-Luis Hervas-Oliver & Jos� Albors-Garrigos & Juan-Jose Baixauli, 2012. "Beyond R&D activities: the determinants of firms’ absorptive capacity explaining the access to scientific institutes in low--medium-tech contexts," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(1), pages 55-81, December.
    12. Marín, Alejandra & Laureiro, Daniela & Forero, Clemente, 2007. "Innovation patterns and intellectual property in SMEs of a developing country," Galeras. Working Papers Series 017, Universidad de Los Andes. Facultad de Administración. School of Management.
    13. Bilanakos, Christos & Heywood, John S. & Sessions, John & Theodoropoulos, Nikolaos, 2018. "Does demand for product quality increase worker training?," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 159-177.
    14. Jose G. Vargas-Hernandez & Omar Cristian Vargas Gonzalez, 2020. "Innovation in Utility Craftsmanship: Analysis Based on Human Capital," International Journal of Business and Economic Affairs (IJBEA), Sana N. Maswadeh, vol. 5(1), pages 42-50.
    15. Jeetendra Khadan, 2018. "Estimating the Effects of Human Capital Constraints on Innovation in the Caribbean," Economies, MDPI, vol. 6(2), pages 1-18, May.

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