Innovation capabilities in very small firms: A study of high-tech firms and their relation to performance

Other, 2010

Organizational capabilities have been widely discussed - most often at a conceptual level and from a large-firm perspective. This paper examines the operationalization and measurement of the capabilities for innovation in small (micro) firms and also how capabilities may be related to the firm’s innovation performanc. Based on a quantitative analysis of 131 micro firms, this paper describes and analyses the dimensions critical for innovation with a special focus on very small high-tech firms. We propose a construct for investigation including five dimensions relating to small firm innovation capabilities and their relation to innovation performance. We found 20 relationships between the innovation capabilities dimensions and innovation performance, of which the dimension of Patent showed to be particularily correlated to capabilities. Our statistical analysis shows that two latent constructs have a positive effect on innovation performance Cooperation with universities and Business planning and advice. This paper contributes to the stream of literature on innovation capabilities. Firstly, we discuss the key notion of relating capabilities to innovation performance measures and presents a construct for that; second, in contrast to most existing studies, we address the notion of capabilities for small firms, and especially micro firms; research around organizational capabilities in various forms has hitherto mainly focused the large firm perspective. We highlight that both areas should be researched further.