A discriminant analysis of high and low-innovative firms: the role of IT, human resources, innovation strategy, intellectual capital and environmental dynamism

Abstract

Purpose This paper aims to examine the effect of technological, organizational and environmental factors on the level of innovation outcomes in manufacturing small- and medium-sized enterprises (SMEs). Design/methodology/approach Drawing on the technology-organization-environment theory this paper conducts a discriminant analysis of firms’ innovation level based on a data set of manufacturing SMEs. Findings The results show that low- and high-innovative firms can be distinguished in terms of information technology (IT) knowledge and infrastructure, commitment-based human resources (HR) selection practices, exploitative innovation and organizational capital. Practical implications The study findings support the idea that innovation is a complex phenomenon explained by multiple factors. As a consequence, firms need to devote extra efforts to develop IT knowledge and infrastructure, commitment-based HR selection practices and organizational capital because these are crucial for obtaining greater innovation outcomes. In addition, the identification of exploitative innovation as a strong discriminant variable highlights that the most effective way to be a highly innovative SME is through incremental innovation, which permits the firm to capitalize as much as possible on previous exploratory efforts. Originality/value Although many studies have highlighted that innovation is more challenging for SMEs than for their larger counterparts, the vast majority of studies has been conducted in large companies. This paper extends prior literature by analyzing the discriminant variables that may distinguish between low- and high-innovative manufacturing SMEs.