INNOVATION IN SMES, A

LITERATURE REVIEW
Diana Marcela Moreno Mancera, Juan Sebastin Bautista Bernal
Management and Technological Innovation, Curriculum Project of Industrial Engineering, Faculty of
Engineering, University Francisco Jos de Caldas
Diana.moreno.mancera@gmail.com, Sebastian1120@hotmail.com

December 8 of 2014
ABSTRACT

III. FACTORS OF INNOVATION

This article shows the results of a bibliographic revision of some

investigations accomplished to international level to mint of the
situation and the factors of innovation on SMEs, how important
the innovation is them, in that levels use her like factor to earn
competitive advantage and the recommendations that some of the
authors do.
KEYWORDS: SMES, TIC, innovation, I+D
I. INTRODUCTION
In the globalized world in which we live economic dynamics are ever
changing and driven by technological innovation, processes,
procedures, management and other types of innovation, this marks a
worldwide trend towards changing conditions market. It is for this
reason that companies with higher levels of innovation are those
leading the market because they have the greatest competitive
advantage.
Innovation generally refers to large companies with capital of very
powerful work that allows them to invest heavily in R & D to boost
innovation and the purchase of infrastructure, technology or any other
input or resource that is necessary for inquiries. However, the size of
a company is, in most cases, much lower than these corporate giants,
which obviously limits its investment opportunities and consequently
growth and increase their competitive advantage. However, SMEs
move largely local economic dynamics and in many cases they do
nationally, which inevitably has an impact on the global market.
In the context of globalization and competitiveness, this article takes
a brief compilation of items on innovation in SMEs, what innovation
means to them? What factors affect the degree of innovation ?, What
innovate? And what can be improved? are some of the issues that
have been searched and are addressed in this article.
II. CONTEXT
SMEs are the engine of many economies in the world, Colombia is no
stranger to this, in 2013 it was estimated that 96% of companies in
the country were MSMEs, and the capital accounts for 96.4% of
them, generating the 70% of employment in Bogot and 40%
nationally (Spectator, 2013), although in other latitudes is not so large
proportion of these businesses, are always significant, as in Trinidad
and Tobago where there are about 18000 such companies, employing
some 200,000 people and contribute about 28% of GDP (Beharry,
2011).
These companies are characterized by the laws 590 of 2000 and 905
of 2004, which states that SMEs are companies with total assets
between 500 SMMLV and 3000 SMMLV, implying a limited
working capital and sources of restricted funding.

There are several factors that innovation is not given or SMEs,

economic, political and even cultural type ("A Research on Factors
Determining Innovation for SMEs," ND), which affect the perception
of businesspeople and hinders them development of innovation in
SMEs. Here are some of them.
A big problem for SMEs is the lack of financial support and the state
for their strengthening, consolidation and growth, these companies
often inhibit their growth because the taxes, benefits and services
charges and legal requirements are more demanding as the businesses
grow; such is the case for your site, because according to their
economic activity and size is necessary that locate in industrial parks
usually found on the outskirts of cities and involve a high cost. As for
innovation, the disadvantages are not minor, as finance, produce and
maintain is a challenge for SMEs anywhere in the world.
One of the critical factors for SMEs to generate innovation funding
because it requires considerable financial resources that are not
necessarily a profitable item for the company in the short term and
have no direct correlation to the resources invested R & D (Kim, Lee,
& Oh, 2009) and there is talk that there is an imbalance between input
and innovations that leave the organization (Liang, Liu, Zhang, &
Zhang, 2010) but also make the clarification on that investment of R
& D is the largest source of innovations of all kinds for companies.
On the other hand there is the question of government support, is that
you can demonstrate that culture of innovation depends largely on
what the government boosts from their policies, and the strategy for
innovation present in South Korea (Kang & Park, 2012) where an
obvious support for innovative thinking and companies who want to
carry out, in fact is part of the recommendations made multiple
authors to support a culture of innovation in SMEs is evident, and that
they may well contribute to GDP. Even the articulation of the various
government institutions (Hottenrott & Lopes-Bento, 2014) and
especially academic (Massa & Testa, 2008), with SMEs play an
important role in the outcome of possible innovations that they can
perform and how they can leverage this competitive advantage and
make it a profitable and differentiable to boost SME factor.
Perhaps the most important question of innovation factor is
investment in R & D, definitely authors worldwide agree that without
investment in R & D is almost zero innovation capacity and even less
ability to maintain this innovation which would give leadership to any
company (Ailin & Lindgren, 2008), especially if it is a manufacturing
company (Raymond & St-Pierre, 2010). All authors state that
research and development are the engine of innovation in any
organization (Kim et al., 2009), which not only technology
innovation but it is important that all areas of an organization should
be part organizational culture of innovation (Sheng, Jin, & Li, 2010).
ICT innovation directly affects SMEs and their ability to innovate,
with the areas that have the greatest impact, marketing, networking,
communication and resource planning; which gives them operational
and financial benefits (Tarut & Gatautis, 2014). Additionally, some

authors recognize that the ability to innovate in software, without the

company is necessarily devoted to it but use it as a platform to
promote their various fields, it is important to gain competitive
advantage (Kohn & Hsig, 2006) and allows them to compete
globally and expand its market largely (Savrul, Incekara, & Sener,
2014)
It also makes innovation in the area of sustainability and ecological
component ("Sustainability-oriented innovation of SMEs: a
systematic review," ND), since many of the production processes are
polluting and environmentally unfriendly ("Drivers of green and nongreen innovation: empirical evidence in Low-Tech SMEs, "ND), but
through innovation is possible that these processes are cleaner and
greener (" Drivers of different types of eco-innovation in European
SMEs , "ND) and will even allow companies to achieve
certification in the subject, which generates added value and
increased profitability for companies, especially SMEs.
Another factor is the human resources, employee training, leadership
of management and organizational culture are fundamental in
generating innovation (Martnez-Romn, Gamero, & Tamayo, 2011),
even generate innovation in management processes of human talent
also brings benefits to any organization.
The protection of intellectual property also comes on the analysis
made by the authors about the possibility and innovativeness of
SMEs is that for these companies is very difficult to protect their
rights (Xu & Fu, 2008) this makes the innovation process necessarily
entails an investment risk for entrepreneurs of SMEs (J. Wu, 2011),
which inevitably restricts the resources allocated for this and hence
the results to be obtained.

dramatically if done with ICT. So any innovation that is done in an

organization, although not technological, technology should be to
some extent through the use of ICT.
V. RECOMMENDATIONS
There are many recommendations made by the authors to promote
innovation in SMEs, and then we describe some that relate to what
has already been discussed in this article.
Electronic commerce: a model of electronic commerce enable SMEs
to reduce the gap with large producers in selling their products,
integration and continuous movement of information is a specialized
tool that could enhance their development (Rojas & Gmez, ND)
Cluster: Cluster adoption among SMEs not only enhance their
competitive advantage, it will allow a greater number of innovations,
providing businesses that are part of it, the possibility of access to
leadership through innovation (Lin & Xiumin, 2010)
Strategy organizational innovation: innovation ultimately should not
be given alone in a field but must be a comprehensive and
coordinated strategy within organizations to generate a synergistic
effect that provides greater benefits than an isolated single innovation
(Xu & Fu, 2008).
Culture of government innovation: Government support and policies
for innovative companies is crucial for the culture of innovation
adoption increases, which is why it is recommended that the
government is the main driver of innovation; laws and actions that
encourage, even with incentives and exemptions for innovative
companies (Kang & Park, 2012).

IV. AREAS OF INNOVATION

During this brief literature review were able to identify several areas
where SMEs trying to innovate their business, some of these areas
are: e-commerce, cluster, ICT, technological, strategic and cultural
innovation (Xu & Fu, 2008) among others.
Electronic commerce, in the era of the information society, is the
most powerful marketing model is known (Savrul et al., 2014), not
only allows an organization to expand its market but also gives you
the ability to show the world its innovations, this is very important
because, as mentioned, market leadership is directly linked to the
innovativeness of a company, and of course, SMEs are not immune to
this statement.
The cluster of speaking Michael Porter are the order of the day,
especially on innovation is that as a result, is more powerful cluster
that innovates and set an SME (Ryung, Chung, & Tibben, 2006) as
this generates innovation throughout the production chain
synergistically enhancing the possibilities that can reach companies,
increasing its value and capital.
Definitely technological innovation is the kind of world-leading
innovation, and that is the most profitable and most are betting people
and industries because it offers many advantages. Such is the case of
Huawei (Y. Wu & Sun, 2009), a company dedicated to innovation,
especially in the field of ICT, in this case and other similar can be
demonstrated that it is not an easy road, but the rewards are very high,
in the case of Huawei is how managers have directed the strategy of
the company and therefore the organizational culture towards
innovation.
Finally strategic and cultural innovation seem to be crossed by what
is innovation in ICT (Tarut & Gatautis, 2014), because although
innovation is not limited to the hard technology is supported from
many angles in ICT, almost anything I was changed within an
organization seeking innovation, you can do better if ICT is utilized,
in terms of marketing, advertising, resource management,
communications, and even the way it exploits human talent changes

Innovative products: often the most profitable products of companies

are those with an innovation in them or they are in themselves, such
as mobile phones or Walkman, including innovation can be the
combination of other innovations, such as smart phones, but the
important thing is that a company, especially SMEs, are always
creating new products (Branzei & Vertinsky, 2006).
VI. CONCLUSIONS
During this review we found that authors worldwide can have many
views about innovation in SMEs is concerned, but all converge on
that this is a key to competitive advantage of them factor, because in
the world of globalization finding a competitive advantage is almost
the only way to compete effectively with the world.
When we talk about innovation in SMEs, shown as a difficult and
bumpy road, including several of the authors consulted do complete
research about the factors that hamper innovation, one being the
resource investments needed to generate some innovation, but
likewise the authors emphasize that investment in R & D is the surest
way to create processes and cultures of innovation in organizations
path.
We also find that the efficient use of ICT in SMEs can be a very
important source of innovation development, since they allow
companies to be closer to their stakeholders, create more efficient
supply chains and reach more customers, being this last reason that
generates more inputs for future innovations. In this use of the ecommerce technologies highlighted as a fundamental tool in strategic
marketing companies as a source of valuable information for the
system of R & D and strategies to achieve competitive advantage for
other markets and reduce costs marketing increasing the profitability
of an SME.
There is one more field of application of innovation in SMEs and
innovation for sustainability and sustainability, achieving progress in

this field is also very beneficial for businesses, giving them greater
added value and marketing elements that can be very helpful
especially for SMEs.
Always competitiveness is enhanced by innovation, and in Colombia
we still have a ways to go about this, for the competitiveness of
SMEs is something mediocre (R, Montoya, & Oscar, 2010), but they
have many opportunities to improvement and growth, provided that
we understand the importance of innovation.
The cluster, although not a new concept are enhanced by ICT and are
much more important source of innovation, especially by the
synergistic effect generated.
Finally we can say that the authors state that innovation cannot be just
the name of a new idea, but constitutes an integrated whole culture
that embraces all areas of an organization and that even affects the
state, the latter being one actors within a global innovation system
depends almost entirely on R & D, ICT connectivity and
competitiveness it generates in SMEs.

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