Innovation and borrower discouragement in SMEs

In this paper, we investigate whether innovative small- and medium-sized enterprises (SMEs) are more likely to be discouraged from applying for external finance than non-innovators. These so-called discouraged borrowers are credit worthy SMEs who choose not to apply for external finance despite the fact that this is needed. We find that SMEs undertaking pure product and joint product and process innovation have a significantly higher incidence of borrower discouragement than non-innovative counterparts. Moreover, radical and incremental product innovators are more likely to be discouraged relative to non-innovative counterparts. Innovative activity can increase borrower discouragement for a myriad of reasons including fear of rejection, reluctance to take on additional risk, negative perceptions of the funding application process and perceived negative economic conditions. Overall, our results suggest a need for targeted policy interventions in order to alleviate borrower discouragement within innovative SMEs, as well as a closer alignment between innovation and SME finance policy.

SMEs’ financial risks in supply chain trade with large companies: The case of Italian automotive component industry

Becoming a supplier of large companies is traditionally considered to be positive for small and medium enterprises’ (SMEs) competitiveness. Small businesses can take several advantages by joining supply chain trade with large companies such as scale efficiency and productivity as well as technological and managerial abilities, product and process innovation, market positioning, and reputation. However, not everything is convenient per se. The subcontracting by large companies might provide some financial criticalities that need to be faced and properly managed by SMEs to exploit supply chain benefits without affecting financial stability and losing competitiveness. In this direction, the literature on supply chain finance has recently focused on financial issues related to working capital optimization in terms of accounts payable, receivable, and inventories. Adopting this perspective, the study contributes to a better understanding of SMEs’ financial constraints in supply chains driven by large companies by investigating a sample of small Italian firms, which operate in the metal casting industry and by comparing firms joining and not joining the automotive supply chain.

Achieving green product and process innovation through green leadership and creative engagement in manufacturing

PurposeThe aims of this study were three-fold: to determine the impact of green transformational leadership on creative process engagement, green product innovation and green process innovation; to examine the association of creative process engagement with green product and process innovation and to identify the mediating influence of creative process engagement in the association between green transformational leadership and green process and product innovation.Design/methodology/approachData was collected through a survey questionnaire from 291 middle- and lower-level managers and employees through simple random sampling in four high-tech manufacturing industries situated in Beijing, Shanghai and Shenzhen in China. We examined the data through structural equation modeling using partial least squares to test the study hypotheses.FindingsThe findings unveiled that green transformational leadership and creative process engagement positively influence green product innovation and green process innovation. Similarly, green transformational leadership is positively linked with creative process engagement. The findings further revealed that creative process engagement mediates the impact of green transformational leadership on green process and product innovation. Hence, our findings provide strong support for the role of green transformational leadership and creative process engagement in improving green process and product innovation.Research limitations/implicationsOur sample is limited to China and collected from high-tech manufacturing industries.Practical implicationsDrawing on the componential theory of creativity, the authors suggest that organizational leaders, specifically those who practice green transformational leadership, should increase creative process engagement among subordinates, as it is a crucial intangible resource for green process and product innovation.Social implicationsWe suggest that a combination of green transformational leadership and creative process engagement improves green process and product innovation as well as the environmental performance of a business by eliminating all forms of hazardous material and waste.Originality/valueThis work is one of the earliest empirical studies to evaluate the influence of green transformational leadership on fostering green product and process innovation and the mediating impact of creative process engagement on the linkage among green transformational leadership, green product and process innovation within the manufacturing context.

Impacts of high-involvement HRM practices on organizational innovation capability: the mediating mechanism of tacit and explicit knowledge sharing

Purpose Given the important role of knowledge sharing (KS) processes for organizational innovation, the purpose of this study is to investigate the mediating roles of tacit and explicit KS in bridging the relationship between high-involvement human resource management (HRM) practices and specific aspects of innovation capability, namely, product and process innovation. Design/methodology/approach Analysis of moment structures and structural equation modeling are applied to examine the correlation among the constructs based on the survey data collected from 111 manufacturing and service firms. Findings The empirical findings reveal that KS processes positively mediate the relationship between high-involvement HRM practices and innovation capability. It highlights the important role of explicit KS in fostering aspects of innovation capability compared to the effects of tacit KS on aspect of innovation capability. Practical implications Vietnamese firms should pay much attention to high-involvement HRM practices to improve their innovation capabilities. In addition, fostering the willingness of employees for sharing tacit knowledge (e.g. experiences, uncommon understandings and insights) and explicit knowledge (e.g. formal information, official documents and reports and procedures and policies) is one of the most optimal solutions for firms to pursuit product and process innovation capability. Originality/value This paper significantly contributes to increasing knowledge and insights on the correlation between high-involvement HRM practices and specific forms of innovation. The understanding on mediating role of KS processes contributes to advancing the body of knowledge of HRM practices and innovation theory.

Innovation, firm productivity, and export survival: firm-level evidence from ASEAN developing countries

This firm-level study investigates the importance of innovation as a determinant of firm productivity and how firm productivity could impact firm export survival. This is the first integration of the innovation approach, productivity approach, and firm survival approach to explore their linkages at the regional level in ASEAN developing countries. Using the panel database from the World Bank Enterprise Survey, which covers six developing countries in ASEAN—the Philippines, Indonesia, Vietnam, Laos, Cambodia, and Myanmar—and also covers six selected industries, we construct four equations: innovation inputs, innovation output, firm productivity, and export survival. The four equations’ findings suggest that the technology level of the sector, firm size, and exports are significant factors for R&D expenditure (innovation input). R&D expenditure is a significant driver of a firm’s product and process innovation (innovation output). Increasing firm productivity in the six ASEAN developing countries we considered is driven by process innovation rather than product innovation, and productive firms are more likely to survive in the export market.

Impact of entrepreneur’s gender on innovation activities. The perspective of small businesses

This paper analyses the female gender as a one of the factors that may influence product and process innovativeness of small enterprises. The data discussed come from an empirical study of 1017 small enterprises from the Kujawsko-pomorskie region in central-northern Poland. The theoretical framework suggests three areas of factors that may influence small enterprises innovativeness: the entrepreneur’s gender, innovation management capability, and firm characteristics. The results of the study suggest that the female gender of the entrepreneur has a positive impact on the product and process innovativeness of small enterprises. In the group of small enterprises managed by female entrepreneurs the chances of introducing product innovation are higher by 83.7%, process innovation by 56%, and product and process innovation together by 82.1%.

Assessment of the Social and Economic Impact of Innovative Construction in Housing in Slum Upgrading: A Case of Mathare Valley, Nairobi

Background: Adequate descent housing is a universal human rights integral component. Resources’ costs and intensified rural-urban migration increase demand for sustainable housing. Modern knowledge-based-economy uses innovation. Construction industry uses product and process innovation to provide adequate and descent low-cost housing. Kenya adopted innovation practices of slum upgrading that uses cost effective locally available building materials. This study looked at the outcomes; social and economic impacts of innovative construction in housing in the Mathare Valley Slum upgrading project Methods: This post occupancy study used exploratorydescriptive research design. Random sampling was used to sample 384 users of low-cost housing projects in Mathare Valley, Nairobi County. Research instruments included semi-structured questionnaires and interview guides. Pilot study, validity and reliability tests ensured quality of study. Ethical considerations included university approval and consent. Statistical package for social sciences (SPSS) software version 21 was applied to compute the descriptive and inferential statistics. Findings: Slum-upgrading had significant-positive outcome on improved houses and community. Social impacts included communal facilities; assurance of security of tenure; and retained frameworks of establishments. Economic impacts included employment; affordable and durable units (p values <0.05). Upgrading process did not influence rent fees, was corrupt and led to displacement of residents. Conclusion: Slum upgrading process affected positively. Similar projects should consider residents in decision-making.

Pay incentives, human capital and firm innovation in smaller firms

This study advances the literature on human resource management in small and medium sized enterprises (SMEs) by analysing how individual and collective forms of performance-related pay (PRP) influence SMEs’ propensity for product and process innovation and how such influence varies depending on the firm’s level of human capital. We used the microdata of more than 12,000 European SMEs, controlled for endogeneity, and found that both individual (i.e. piece rate and commissions) and collective (i.e. group-bonus and profit-sharing) PRP are positively associated with higher levels of firm innovation. Interestingly, when both individual and collective PRP schemes are adopted, their association with firm innovation is significant but negative, indicating that the adoption of multiple pay incentives may be detrimental to SMEs’ innovation. Moreover, our results revealed that the effect of individual PRP on innovation is stronger in SMEs with high levels of human capital, whereas the effect of collective PRP is stronger in SMEs with low levels of human capital.