INFLUENCE OF THE BUSINESS ENVIRONMENT IN THE DYNAMICS OF INNOVATION AND IN THE PERFORMANCE OF SMEs

Abstract

The main aim of this paper is to study the influence of the business environment on innovation strategy, innovative activity and performance in the SMEs. Business environment has been considered, taking into account its dynamism and its hostility. An empirical study is carried out on a sample composed by 302 Spanish firms. Results show that SMEs react in hostile and dynamic business environment by means of strengthening their innovation strategy. Innovation strategy allows firms to carry out higher levels of product and process innovations, which turn out into a positive effect on performance. Results offer important implications for SMEs, as such the relevance to reinforce the importance of developing an innovation strategy in the framework of their formal strategic planning.