R&D as a determinant of innovation in manufacturing SMEs: An attempt at empirical clarification

Abstract

Innovation has long been considered as the key factor for the survival, growth and development of small and medium-sized enterprises (SMEs). Other than firm size, the determinant of innovation that has received the most attention from researchers is research and development (R&D). While having been the object of numerous studies, the link between R&D activities and innovation in SMEs still requires clarification and further understanding. The aim of this research is thus to clarify and better understand the impact of R&D upon innovation in SMEs by conceptually and operationally distinguishing product R&D from process R&D, process R&D from process innovation, and process innovation from product innovation, taking the sector's technological intensity into account and integrating these concepts in a research model that specifies their interrelationships. This model is tested empirically with survey data from 205 Canadian manufacturing SMEs. The results confirm that the impact of R&D on product innovation is mediated by process innovation.