This article was downloaded by: [The Aga Khan University]On: 19 December 2014, At: 07:33Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Journal of Small Business &EntrepreneurshipPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/rsbe20

Innovation Management in SMEs:Active Innovators in New ZealandDelwyn N. Clark aa Waikato Managment School , University of Waikato , NewZealandPublished online: 19 Dec 2012.

To cite this article: Delwyn N. Clark (2010) Innovation Management in SMEs: ActiveInnovators in New Zealand, Journal of Small Business & Entrepreneurship, 23:4, 601-619, DOI:10.1080/08276331.2010.10593504

To link to this article: http://dx.doi.org/10.1080/08276331.2010.10593504

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoeveror howsoever caused arising directly or indirectly in connection with, in relation to orarising out of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms& Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Journal of Small Business and Entrepreneurship 23, no. 4 (2010): pp. 601-619 601

Innovation Management in SMEs: Active Innovators in New Zealand

Delwyn N. Clark, Waikato Managment School, University of Waikato, New Zealand

ABSTRACT. Since innovation is a key driver of economic growth and social development, research on innovation activities and processes is vital for policy makers, practitioners and scholars. This paper reports key findings from an empirical study of innovation processes in 95 New Zealand SMEs which are active innovators. Results include the characteristics of innovative New Zealand SMEs, the types of innovations they are developing, and their perceptions of the context for innovation in New Zealand. The status of their innovation management processes were also evaluated using indices for Srategy, Market, Innovation, and Resource factors. These companies are well established, demonstrating significant growth, high propensity to innovate and a portfolio of innovations. Further, they are well organised to commercialise their innovations. However, significant inhibitors to growth were identified and these have specific policy implications which are important given the imperative for economic growth and productivity improvements in New Zealand.

RéSUMé. Puisque l’innovation est un moteur clé de la croissance économique et du développement social, la recherche sur les activités et les processus liés à l’innovation est d’une importance vitale pour les décideurs, les praticiens et les universitaires. Cet article rapporte les principaux résultats d’une étude empirique des processus d’innovation dans 95 PME néozélandaises qui sont dynamiques en matière d’innovation. Les résultats incluent les caractéristiques des PME néozélandaises innovatrices, les types d’innovations qu’elles développent, et leur perception du contexte dans lequel s’inscrit l’innovation en Nouvelle-Zélande. Le stade de leur processus de gestion de l’innovation fut aussi évalué en utilisant des indices pour les facteurs suivants : Stratégie, Marché, Innovation, et Ressource. Ces entreprises sont bien établies et démontrent une croissance significative. De plus, elles affichent une propension élevée à innover et ont un portefeuille d’innovations. Elles sont aussi bien organsinées afin de commercialiser leurs innovations. Par contre, plusieurs facteurs qui entravent la croissance furent identifiés et ceux-ci ont des implications spécifiques importantes pour les politiques compte tenu de l’importance d’améliorer la croissance économique et la productivité en Nouvelle-Zélande.

Introduction

Innovation is a key driver of economic growth and social development (Marchese 2009; Lewis, 2008). Consequently, innovation processes are considered at multiple levels of analysis, from national innovation systems, to underpinning regional growth strategies, and as the basis for organisational performance and competitiveness (OECD, 2004; OECD, 2007; Nauwelaers and Wintjes, 2002; Tushman and Nadler, 1986; Frances, 2004; Adams, Bessant, and Phelps, 2006). Research to understand the complex nature and management of innovation processes is vital for policy makers, managers, entrepreneurs, advisors, and academics.

As innovation essentially involves converting new ideas into action, the scope of innovation is wide ranging, from developing new products, processes and technologies, to creating new markets or administration systems such as business models or procedures (Van de Ven, 1986; Markides, 1997; Miller, 2001). Some innovations lead to the establishment of new entrepreneurial ventures or businesses which “generate jobs, revenue, expertise and often public good” (Gamota, Messeri and Lal, 2005: 65). Innovations are often differentiated as incremental or discontinuous based on the scale of change involved;

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

602 CLARK

and the processes for managing major innovative changes require understanding of the underlying technology life cycles (Tushman and Nadler, 1986; Tushman, Anderson, and O’Reilly, 1997; Christensen, 1997; Christensen and Raynor, 2003; Stringer, 2000). While large companies have the resources to innovate, Quinn (1985) proposed that they need to behave like small entrepreneurial ventures to overcome the bureaucratic barriers which act as inhibitors of innovation.

In many countries around the globe, small firms are the dominant form of enterprise, typically accounting for over 95% of the business population (OECD, 2004). As small businesses operate and are managed differently from large companies (Friedlander and Pickle, 1968; Preston, 1977; Edmunds, 1979; Welsh and White, 1981; Churchill and Lewis, 1983; d’Amboise and Muldowney, 1988), it is appropriate to consider innovation processes within small firms. While definitions of small and medium enterprises (SMEs) vary from country to country, the OECD considers firms with less than 250 employees or €50M annual turnover as SMEs. This study will focus on innovation processes in small and medium enterprises in New Zealand.

Innovation in Small Firms

Internationally there has been a range of different research projects focussed on innovation in SMEs. These include research on the impact of strategic orientation on innovation within manufacturing firms in Greece (Salavou, Baltas and Lioukas, 2004) and the UK (O’Regan and Ghobadian, 2005; O’Regan, Ghobadian, and Sims, 2006). The effects of innovation strategies on specific product innovation capabilities were examined in Canadian manufacturers (Branzei and Vertinsky, 2006), and the role of product and process improvements on growth and profitability of SMEs has been studied in US manufacturers by Wolf and Plett (2006). Another US study of technology-related industries found that the antecedents of innovation speed in SMEs were different from large firms (Allocca and Kessler, 2006). In Australia, strategic decision making processes of entrepreneurs in small high innovator firms were evaluated and diagnostics for assessing their innovation management systems presented (Mazzarol and Reboud, 2006). The impact of internal processes on product and process innovation was considered in France by Motwani et al. (1999). Details of the French national innovation system were discussed and comparisons made with SMEs in Australia, Switzerland and France (Reboud, Mazzarol and Volery, 2009). In the UK, innovation activities in remote and accessible rural manufacturing and service SMEs were compared (North and Smallbone, 2000), and a process perspective on innovation was recommended to ensure that an integrative approach to innovation is adopted to assess intra- and inter-organizational firm links (Edwards, Delbridge, and Munday, 2005). The relative performance of small manufacturing firms in the West Midlands was evaluated (Freel, 2000), and firm growth and performance was examined in Scotland and Northern England (Freel and Robson, 2004). In addition, resource and capability constraints to innovation were studied using a longitudinal study of manufacturing plants in Ireland (Hewitt-Dundas, 2006). In the Netherlands, significant differences in innovative practices for product innovation by small firms were found across seven industries (De Jong and Vermeulen, 2006). The diversity of approaches adopted in innovation studies and the complexity of the factors involved was noted by Adams, Bessant, and Phelps (2006) in their review of innovation management measurement. A broader set of measures for innovation management was proposed to address some of the weaknesses such as overreliance on financial measures and inadequate proxies for R&D (especially for SMEs).

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 603

The New Zealand Context for Innovation

New Zealand is a small open economy which has historically been reliant upon commodity production in agriculture, fishing and forestry. Although these sectors account for only around 7% of GDP, they provide a far greater share of export earnings and an important source of foreign exchange (EIU, 2008). Government policy initiatives have sought to reduce the impact of fluctuating world commodity prices by encouraging diversification into technology- and knowledge-based sectors, increasing value-added products, and focussing on export markets (Hamilton and Dana, 2003; Smith, 2006; Lewis, 2008). Further impetus for growth and innovation arises from the relatively low income per capita in New Zealand—rating 22nd in the OECD and at 76% of the income level in Australia (MED, 2007a; Whitehead, 2008). Although ranked 24th in the 2008/2009 World Economic Forum Global Competitiveness Report, New Zealand lags behind peer countries in innovation factors, business sophistication and market size (New Zealand Institute, 2008).

The Ministry of Economic Development (MED, 2007a) notes that catching up with other international countries will require high and sustained growth in productivity, significant changes in the products and services produced, as well as how they are produced, and increasing numbers of innovative and globally competitive firms. Amongst their recommendations for improvements, the Small Business Advisory Group (SBAG, 2008) has advised the New Zealand government to establish a policy goal of making the business environment in New Zealand competitive with Australia’s. Callaghan (2009) argues for greater investment in R&D and a major culture shift to create more knowledge-based high technology enterprises.

Innovation was recognised as a priority by the New Zealand government in the national Growth and Innovation Framework in the early 2000s, and was seen as fundamental to the Economic Transformation Agenda from 2006. Marsh and Oxley (2004) modelled innovative activity in the biotechnology sector, and Campbell-Hunt’s research programme focussed on competitive advantage in exemplar New Zealand companies (Campbell-Hunt et al., 2001), including how small manufacturers can cope with dramatic increases in sales (Corbett and Campbell-Hunt, 2002). Analysing data from the Ministry of Economic Development’s 2001 Business Practices Survey, Fabling and Grimes (2007) found both internal business practices and market factors were determinants of success. The Growth and Innovation Advisory Board noted strong support for innovation, but limited understanding of the process of innovation (MoRST, 2004). Mills and Timmins (2004) reported that New Zealand’s relative position in the OECD for firm dynamics and business demographics was broadly within the OECD range if comparable data was used; however, this excludes zero-employee firms (which comprise 67% of NZ enterprises) and one-year old firms. Each year, the Ministry of Economic Development reports on the size and structure of the New Zealand SME sector (MED, 2009). The OECD’s 2008 profile of New Zealand’s innovation system, which is shown in Figure 1, highlights the strengths and weakness of the environment for science and innovation.

The Business Operations Survey (BOS) was introduced in 2005 to collect data on business practices and performance in New Zealand (MED, 2007b). In terms of funded R&D, only 7% of the NZ businesses surveyed had undertaken or funded R&D in the previous financial year. Larger firms tended to engage more, as 15% of businesses with 100 or more employees reported R&D activity, compared with 6% of businesses with 6-19 employees. The manufacturing industry had the highest proportion of businesses engaged in R&D activity (14%).

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

604 CLARK

Using a broader definition of innovation (aligned with the OCED’s definition), the BOS found 52% of NZ firms engaged in innovative practices, including innovation in goods and services (30%); innovation in operational processes (29%); innovation in organisational or managerial processes (31%); and innovation in marketing methods (29%). Overall, larger businesses were more likely to engage in innovation than smaller businesses—68% of businesses with 100 or more employees, compared with 50% of businesses with 6-19 employees. The highest rate of innovation was found in the finance and insurance industry (68%), followed by the manufacturing industry (65%) (MED, 2007b).

Although research on SMEs in New Zealand has addressed a wide range of issues as illustrated in Table 1, the innovation activities and processes of the SMEs which are active innovators have not been studied to date. Understanding the effective management of innovation processes in SMEs is very important to policy makers, business advisors, managers, and entrepreneurs in New Zealand given the national strategic goals and composition of the economy.1 Research to understand the nature of innovation activities and innovation management processes is important and timely. This project aims to contribute to this gap by providing new evidence, analysis and insights from SMEs which are active innovators. Four key research questions on their innovation activities and innovation management processes will be addressed: (1) What are the characteristics of innovative New Zealand SMEs?; (2) What types of innovations are innovative New Zealand SMEs developing?; (3) How do innovative SMEs perceive the innovation context in New

1 New Zealand is a nation of small and medium enterprises with 99.5% of companies having less than 100 em-ployees (MED, 2009).

Figure 1. OECD’s New Zealand Science and Innovation System Profile

__________ New Zealand - - - - - - - - - - Average

GERD as % of GDP

BERD as % of GDP

Venture capital as % of GDP

Triadic patents per million population

Scientific articlesper million population

% of firms with new-to-market product innovations (as % of all firms)

% of firms undertaking non-technological innovation (as % of all firms)

% of firms collaborating (as % of all firms)

Patents with foreign co-inventors

% of GERD financed by abroad

Researchers per thousand total employment

Science and Engineering degrees as % of all new degrees

HRST occupations as % of total employment

Source: OECD Science, Technology and Industry: Outlook 2008, www.sourceoecd.org/9789264049918

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 605

Zealand?; and (4) What is the status of the innovation management processes in innovative New Zealand SMEs?

In addition, from the empirical evidence, four specific research hypotheses on levels of innovative activity linked to the key research questions will be examined: (P1) Due to resource scarcity, smaller innovative firms will be more likely to have lower levels of innovation activity.

(P2) Due to resource scarcity, small firms with higher levels of innovative activity will be less likely to develop new innovations with high sales volumes.

(P3) Small firms with higher levels of innovative activity will have different perceptions of the external context than those with lower levels of innovation.

(P4) Small firms with lower levels of innovation activity will be less likely to have effective innovation management processes (and will have lower Innovation Diagnostic Diamond scores).

Research Methodology

For this study, data was collected on innovation activities and processes in SMEs from a purposeful sample of 95 New Zealand companies selected on criteria for size, trading history and innovation activity (Patton, 2002). Size limits were based upon OECD definitions for SMEs of less than 250 employees and annual turnover up to NZ$100 million, as this project was conducted as part of an international research programme in 11 countries. As

Table 1. Examples of SME Research in New ZealandBusiness Assistance Lewis et al. (2007)Contracting Practices Van Peursem and Wells (2000)Failure Rates Cox and Vos (2005)Finance and Investment Decisions Vos and Vos (2000)

Vos and Webber (2000)Locke and Scrimgeour (2003)Vos et al. (2007)

ICT Adoption Corner, Bowden and Clark (2002)Locke (2004)Ramsey and McCole (2005)

Internationalisation Coviello and Martin (1999)Chetty and Campbell-Hunt (2003)Agndal and Chetty (2007)

Marketing Brooksbank and Taylor (2000)Manufacturing Simpson et al. (2000)

Corbett and Campbell-Hunt (2002)Performance Measures Corner (2001)Size Differences Hamilton and Lawrence (2001)Strategic Alliances Rothkegel, Erakovic and Shepherd (2006)Sustainability Practices Lawrence et al. (2006)Training Massey (2004)

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

606 CLARK

evidence of trading history was required, start-ups and very early stage ventures (under three years of operations) were excluded. As evaluation of one new innovation was a key part of the study, evidence of innovation activity was a primary selection criterion. Given the small scale of New Zealand industries, a multi-industry sample was required for this New Zealand study of active innovators; industry/sectors with well-defined products and high levels of innovation and commercialisation were targeted.

A diagnostic survey instrument on strategic innovation processes was developed by the programme leaders and pilot-tested to check on content, readability, timing, and accurate modelling within the spreadsheet (CEMI/CEREN, 2006). The questionnaire was also pilot-tested before use in each country, including this New Zealand study. Major sections of the instrument included questions on innovation types, innovation context perceptions, current innovation profile, strategic innovation, innovation indices, attitudes to innovation, and the company profile.

Companies were invited to participate by phone and email after background research on their profiles had been reviewed. Face-to-face interviews were conducted with owner-managers or senior executives using the diagnostic questionnaire, and summary reports were provided to all participants after their interview. Data analysis included descriptive statistics and significance testing using Chi-square for categorical variables and analysis of variance for metric variables (Martin and Bateson, 2007).

Innovation Measures

Three specific measures of innovation were adopted from prior innovation research for use in this study. These measures, which focus on types of innovation, returns from new innovations and innovation management processes, will now be briefly discussed.

Innovation Types. Innovation for small firms involves changes to maintain or improve competitiveness. The scope of these changes includes new and better ways of doing things which span all aspects of the business—from products and processes, to new markets and organisational innovations (Schumpeter, 1934). For this study, the five types of innovation outlined by North and Smallbone (2000) in their SME research in the UK were adopted:

Product or service innovations1. (e.g. new products or services developed from research or introduced to the market).Market development innovations2. (e.g. entering new markets with existing products).Marketing innovations3. (e.g. development of new brand or use of databases for marketing).Process technology innovations4. (e.g. applications of new tools or methods such as computer controlled manufacture).Administrative innovations5. (e.g. application of computer systems to office management).

Return from New Innovations. Entrepreneurs and managers are frequently faced with decisions about which new innovation to adopt. For these decisions, it is important to understand the likely impact of the potential innovations on their firm’s future revenue streams. Santi et al. (2003) have developed a model which assesses the potential rent-return (RENT) from an innovation based upon three components: volume of sales, the rate of margin, and length or duration of the innovation’s life cycle. Based upon high or low component levels, Santi et al. (2003) proposed a typology of six different potential RENT configurations. The CEREN/CEMI RENT diagnostic which utilises these potential

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 607

RENT configurations as a basis for evaluating new innovations and understanding their implications for investment and returns (Mazzarol and Reboud, 2006) was adopted for this study. Table 2 shows all of the potential RENT configurations, including two variations of the ‘Flash in the Pan’ and ‘Oasis’ options.

Clearly the potential RENT varies for each of these configurations and the scale of the variables. Entrepreneurs, managers and investors would be much more enthusiastic about a new innovation which is a ‘Champion’ with potentially high sales, high profits and a long life cycle, than a ‘Shrimp’ offering much lower potential RENT. In addition to evaluating the potential RENT from a new innovation, these configurations provide a useful diagnostic tool to explore the implications of each innovation. For example, does the firm have the resources to implement the ‘Champion’ innovation and extract all the potential RENT from it? Can the volume of sales be increased to improve the potential RENT from an ‘Oasis-True’ innovation? Can the rate of margin be increased for a ‘Joker’ innovation? Can the life cycle be extended for ‘Flash in the Pan – High Profits’ innovation?

Innovation Management Processes. The process of managing the development and implementation of new innovations is also important for firms to successfully commercialise their new ideas. Mazzarol and Reboud (2006) have designed an Innovation Diagnostic Diamond which can be used to evaluate an entrepreneur’s current approach to innovation management. This tool calculates indices for activities in four key areas—market, innovation, resources and strategy.

Market Index1. – a measure of the firm’s focus on customer needs and how the new innovation offers value for money.Innovation Index2. – a measure of the firm’s formal process of new product development and its management of intellectual property.Resources Index3. – a measure of the firm’s technological, human, financial and managerial resources.Strategy Index4. – a measure of the firm’s strategic planning activities as related to the commercialisation process.

These indices are calculated on a 1-10 scale and plotted on a diamond-shaped radar graph to provide a visual representation of the firm’s performance. This diagnostic enables entrepreneurs, managers and investors to see at a glance how well the firm’s activities are organised. With this tool, areas of weakness in innovation management can also be identified and then addressed.

Table 2. Potential RENT ConfigurationsVolume of Sales Rate of Margin (Profit) Length of Life Cycle Configuration Name

High High Long ChampionHigh High Short Flash in the Pan- High ProfitsHigh Low Long JokerLow High Long Oasis - TrueHigh Low Short Flash in the Pan- Low ProfitsLow Low Long Oasis – MirageLow High Short GadgetLow Low Short Shrimp

Source: Adapted from Mazzarol and Reboud (2005).

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

608 CLARK

Results and Discussion

Key results from this sample of New Zealand companies will be reported and discussed in this section to address each of the research questions and propositions. First, a brief profile of the companies and their innovation activities will be provided, and then findings on the innovation context, types of innovations and innovation management processes will be presented.

To address question 1, a profile of the innovative New Zealand companies studied will be provided, including details of their size, age, growth, and industry background. The age profile for this sample of New Zealand companies shows that most of these innovative companies were well established with an average age of 20.8 years. The companies ranged in age from 4 to 143 years, with only 18% of the companies having been in business for less than 10 years. In terms of size, the average number of full-time employees (FTE) was 56, which was a 17% increase from 48 FTE three years prior. The current FTE profile showed 25.3% of these innovative New Zealand companies had fewer than 20 FTE, 29.5% had 20-49 FTE, 23.2% had 50-99 FTE, and 22.1% had 100-249 FTE.

Figure 2 shows the sample profile by size (FTE) and age (years). While most of the smaller companies were younger (<10 years), there were also some larger firms in each age bracket. Further, some of the established companies had remained small for over 20 years.

The annual turnover distribution also shows significant growth over the previous three year period; average gross annual turnover for these companies increased 65% from NZ$8.4 million three years prior to NZ$13.8 million. While just over half of the companies generated less than NZ$10 million in current revenue (55%), many companies were generating significantly higher revenues, as shown in Figure 3. It is important to note that these companies are much larger than the average New Zealand small firm, which

Figure 2. Size and Age of Companies

What best describes the length of time your firm has been in operation?

How

man

y fu

ll tim

e em

ploy

ees d

oes y

our c

urre

nt fi

rm e

mpl

oy?

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 609

is partially attributable to the use of the OECD size definitions for comparability in this international research project, and it also reflects their track records.

In terms of industry, this sample includes 56% manufacturers, 15% IT and software, 7% communication and other services, 11% tourism, cultural and recreational services, 6% wholesale/retail trade, and 5% other (including energy and publishing). Note, as this is a specialist sample of innovative SMEs, it does not include companies from all industries or sectors.

Innovation Propensity

Given the focus of this international research programme on innovation returns and innovation processes, it was important for the companies participating to have some experience with innovation. Pre-screening looked for evidence of new products, new markets or introduction of new technologies, as well as asking if the company was planning to introduce a new innovation within the next three years. To assess the propensity to innovate, interviewees were asked about their focus on new innovations,2 to estimate the numbers of new innovations introduced over the previous three-year period, as well as their level of investment in new innovations.

Innovation was perceived to be a major focus in these New Zealand companies, as 92% reported ‘always’ or ‘mostly’ responses to this question [within the innovation index]. The scale of innovation activity over the previous three years was high, as most of these companies (59%) reported introducing more than 10 innovations, 23% introduced 6-10 innovations, and only 18% introduced less than five innovations during this period. Further, the average annual investment in new innovations was 19% of turnover for these companies. While the scale of individual innovations was variable, the level of investment

2 “Do you feel that the generation of new innovations is a major focus of your firm?”

What was your firm’s annual turnover three years ago?

Wha

t is y

our

firm

’s c

urre

nt g

ross

ann

ual t

urno

ver?

Figure 3. Gross Annual Revenue Current vs Three Years Ago

100,000,000

10,000,000

1,000,000

100,000100,000 1,000,000 10,000,000 100,000,000

+ 1-5 x 6-10 o >10

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

610 CLARK

was lower for companies introducing less than five innovations (average 11% of turnover). Overall, these New Zealand companies have a high propensity to innovate based upon their innovation focus and extent of innovation activity. Hence, this sample can be considered as ‘active innovators.’

Table 3 shows the levels of innovation activity (using the numbers of innovations in the past three years) by company size (FTE). While there are approximately the same numbers of innovative companies in the four different size categories, the differences in the numbers of innovations by size are not significant (Chi-square p=0.336). This is an interesting finding. While increased size is often considered to be a proxy for more resources to enable innovation, this result shows that, in this context, the propensity to innovate is not dependent on company size. This shows that proposition P1 is not supported; hence, we find active innovators of all sizes in New Zealand SMEs. Figure 3 demonstrates this further using gross annual turnover for size (the companies are colour-coded by the three levels of innovation used in this study). Note, these are established companies engaging in innovation rather than new start-ups and, hence, they are more likely to have capabilities for product innovation and established networks which enable co-operation to obtain resources (Winters and Stam, 2007).

Innovation Types

Interestingly, all of these New Zealand SMEs had a portfolio of innovations which included different types of innovations (e.g. product/service and market development, process technology, marketing innovations). To address question 2, the distribution of innovation types for the New Zealand companies are provided in Table 4. While product/service innovations were the dominant type of innovation, many companies were also actively innovating in market development and, to a lesser extent, in process technology.

Potential returns for one new innovation for each company were assessed using the CEREN/CEMI RENT model diagnostic (2006), and the results are shown in Table 5. Over half of the new innovations examined scored in the ‘Champion’ category, which potentially provides the greatest return based on high sales, rate of return and lifetime. This relatively high level of high potential innovations reflects the nature of the sample as experienced innovators. A similar level of ‘Champion’ innovations was found in Australia, while, in France, the average category was the ‘Shrimp’ (Mazzarol and Reboud, 2007). The ‘Oasis-True’ category was the second highest innovation reported by 13.7% of these New Zealand companies. These innovations have relatively high returns and durable life cycles, but relatively low potential sales. While they are likely to be more suitable for a small business to manage, this category also reflects the limitation to growth that a relatively small market

Table 3. Company Size (FTE) and Number of InnovationsSize Number of Innovations* Totals TotalsFTE 1-5 6-10 >10 n %0–19 6 8 10 24 25.3%

20–49 6 4 18 28 29.5%

50–99 4 5 13 22 23.2%

100–249 1 5 15 21 22.1%

Totals 17 22 56 95 100%

Notes. *Number of innovations during the past three years; Pearson Chi-square significance p=0.336 (p>0.05)

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 611

size (as in New Zealand) poses for some products and sectors. The third most frequent innovation category was the ‘Flash in the Pan - High Profits’ which represents high sales and high potential returns during a shorter life cycle. This category is very important for many companies which operate in sectors with relatively short product life cycles and also where IP cannot be protected. Companies dependent on these types of innovations need to produce a continuous stream of innovations in order to maintain and improve their performance.

For proposition P2, differences in the innovation types by innovation levels were tested and found to be significant (Chi-square p=0.045). However, as the results show higher proportions of new innovations with high sales volumes (‘Champion’, ‘Flash in the Pan – High Profits’, ‘Joker’, ‘Flash in the Pan – Low Profits’) than new innovations with low sales volumes (‘Oasis – True’, ‘Oasis – Mirage’, ‘Gadget’, ‘Shrimp’), the proposition is not supported. Hence, in spite of their small size and limited resources, most of these active innovators are developing new innovations with high sales volumes and significant RENT potential.

Table 4. Distribution of Innovation Types

Types of InnovationsProportion of Total Innovations*

0-20% 21-40% 41-60% 61-80% 81-100%1. Product/Service Innovations 9 31 26 23 62. Market Develop. Innovations 38 35 15 7 03. Marketing Innovations 59 21 10 5 04. Process Technology Innovations 52 26 10 6 15. Administrative Innovations 73 13 6 3 06. Other Innovations 87 4 3 1 0Notes. * Each company indicated the proportion of their innovations using these five categories. Bold highlighting shows the modal response.

Table 5. New Innovations (RENT Potential) by Innovation Levels

Innovation Type RENT Potential

Number of Innovations * Total Total1–5 6–10 >10 n %

High Volume of SalesChampion 6 11 35 52 54.7%Flash in the Pan – High Profits 0 2 6 8 8.4%Joker 2 0 1 3 3.3%Flash in the Pan – Low Profits 1 2 4 7 7.4%

Subtotals 9 15 46 70Low Volume of Sales

Oasis – True 3 4 6 13 13.7%Oasis – Mirage 1 3 1 5 5.3%Gadget 1 0 2 3 3.2%Shrimp 3 0 1 4 4.2%

Subtotals 8 7 10 25TOTAL 17 22 56 95 100%

Notes. * Number of innovations in the past three years.

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

612 CLARK

The in-depth evaluation of these new innovations shows that they appear to be more incremental than radical in nature. Almost two-thirds of the new innovations (64%) integrate into an existing system rather than working alone, and approximately one-third (37%) substitute an existing product. While two-thirds of the new innovations (63%) create a new market, only 41% of the new innovations create a new dominant design. Further, the majority of the new innovations (59%) are compatible with existing products or processes.

The source of the innovation was also considered as part of the in-depth evaluation of the new innovation for each company. One-third of the new innovations were generated with assistance from a wider network, and one-quarter were generated by the company acting alone. Almost another quarter of the innovations were generated with involvement of lead customers, which demonstrates significant responsiveness to customers. For the innovations profiled in this study, key suppliers and research centres were only important in the innovation generation process for a very small proportion of the companies (4-6%).

Perceptions of the External Context for Innovation

The external environment provides the context for innovation, which can potentially be enabling, neutral or inhibiting. To address question 3, the influence of the New Zealand context on innovation activities was examined by assessing the perception of these New Zealand innovators to a series of key environmental factors using a Likert-type scale. Table 6 shows the mean scores (out of 5) for these companies grouped by innovation levels (numbers of innovations), with the lowest mean highlighted, and provides the significance tests (ANOVA probability of different means).

The three factors with the highest mean sores were the New Zealand lifestyle, access to high quality research centres and access to external financing to fund future growth. Lifestyle impacts on companies in many different ways, which may mean increased business for tourism companies, or perceptions of New Zealand’s “clean and green image” may influence brand values and identity for exporters. Perceived access to high quality research centres was scored highly by many of these companies. This finding is very interesting given the broad geographic spread of the companies and the relatively small number of specific research centres in the country. Furthermore, this shows that physical proximity is not a constraint to access to research centres in New Zealand. The perception of relatively easy access to external financing of future growth is surprising given the small scale of the venture capital market in New Zealand. However, these companies were well established and primarily financing their own new projects from retained profits (94% of sample) and loans (78%). The mean perceptions for the three groups of innovators were significantly different for this factor, which implies that access to finance was not uniform for these companies. The companies introducing 6-10 innovations had a much lower mean perception score and may have more difficulty obtaining sufficient funding for their growth. On average, these companies had invested 21% of turnover in their new innovations over the past three years.

The contextual factors with the lowest mean scores were the regulatory environment, ease of access to managerial staff, and ease of access to skilled workforce. These results suggest that growth of innovative companies will be inhibited in New Zealand, as managerial staff, skilled employees and the regulatory framework are fundamental for increasing business activities. Significant differences were found for the three groups of innovators in their mean scores for ease of access to a skilled workforce. As the companies introducing more innovations are likely to need more skilled employees, this result of

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 613

lower mean perception scores indicates that it is more difficult for them to get the staffing needed for their innovative growth.

There was a high level of agreement from these innovative companies that the New Zealand context does not provide strong government support for local innovators. Furthermore, over half of the innovators perceived that the cost of doing business was not low in comparison with other countries, and geographic distance to markets was a problem for many of these New Zealand companies. Overall, these results show that proposition P3 is not supported, as the perceptions of the external context do not vary significantly by level of innovation activity for these innovative companies except for two of the factors (access to external financing and access to skilled workforce).

Innovation Management Processes

To address question 4, the processes associated with their new innovation were evaluated for each company to identify the status of innovation management processes in the innovative New Zealand SMEs. For this analysis, four key indices were calculated and reported using the Innovation Diagnostic Diamond (Mazzarol and Reboud, 2006) in Figure 4. The average scores were very high with three of the indices (Market, Innovation and Resource) scoring over 7.8, and the Strategy score just below on 7.5. These results suggest that these New Zealand companies are very well organised to commercialise their innovations. The ability to manage the implementation processes for new innovations is important to realise their potential. Hence, these findings are consistent with the growth and performance data for these New Zealand companies.

Table 6. Perceptions of the New Zealand Environment by Innovation Levels

External Environment FactorsInnovation Level Means

Number of Innovations*P value

1-5 6-10 >10The lifestyle in this country enhances our business. 3.24 2.86 3.50 0.102It is easy for a business such as ours to access high quality research centres (e.g. universities) locally. 3.00 3.32 3.21 0.603

It is easy for a business such as ours to access external financing (e.g. banking or venture capital) to fund future growth. 3.47 2.55 3.20 0.042**

The communications infrastructure in this country (e.g. roads, telecommunications, internet services) are excellent for our business. 3.18 3.32 2.80 0.111

Geographic distance to key markets is not a problem for our business. 2.94 2.68 2.79 0.824Government support for local innovators is strong. 3.00 2.68 2.75 0.664The cost of doing business is low in comparison to other countries. 2.82 2.55 2.82 0.606It is easy for our business to access a workforce with the necessary skills and education. 3.00 2.64 2.34 0.024**

It is easy for a business such as ours to find and recruit high quality managerial staff to assist with future growth. 2.71 2.32 2.43 0.493

The regulations governing business operations in this country (e.g. patent laws, taxation, corporate governance rules) are excellent for our business.

2.47 2.55 2.41 0.871

Notes. Using Likert scale 1-5 Bold highlighting indicates lowest mean score (out of 5) * Number of innovations during the past three years ** ANOVA probability shows mean differences are significant (p<0.05)

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

614 CLARK

To evaluate proposition P4, the innovation management indices for the three groups of companies sorted by the levels of innovative activity were compared. As shown in Table 7, differences in means were not significant for the Market, Innovation and Strategy indices. However, differences in means for the Resource indices were found to be significant (p<0.05) for the three levels of innovation activity; but proposition P4 is not supported as the indices do not increase with increasing innovation activity levels. Hence, the effectiveness of their innovation management processes is not directly related to the levels of innovative activity for these small innovative firms.

Two of the key factors included in the Resource index, which are fundamental to successful implementation of new innovations, are adequate staffing resources and adequate financial resources. Means for these two factors were also significantly different for the three groups of innovation activity (staffing resources p=0.024; financial resources p=0.049). Much higher mean scores were found for many of the other types of resources

Table 7. Innovation Management by Innovation Levels

Innovation Index

Number of Innovations*Sample Mean Probability

1–5 6–10 >10Market 8.11 8.07 8.19 8.15 0.919Innovation 7.56 7.83 8.05 7.91 0.219Resource 7.73 7.39 8.09 7.86 0.016**Strategy 7.39 7.64 7.46 7.49 0.807Notes. * Number of innovations during the past three years. ** ANOVA probability shows mean differences are significant (p<0.05)

Figure 4. New Zealand – Innovation Diagnotic Diamond

Strategic Innovation Index

Market Index

Resource Index

Innovation IndexStrategy Index

Maximum Score NZ Average Score

10

8

6

4

2

0

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 615

needed to develop and implement new innovations (e.g. technological resources, project management expertise, access to expert assistance, physical resources, management board).

Conclusions

This paper has reported key findings from an empirical study of innovation processes in 95 innovative New Zealand SMEs which addressed a series of research questions and propositions. As this is the first in-depth study of innovation activity and innovation management processes in New Zealand SMEs, the results provide new evidence and insights which are relevant for SME managers, entrepreneurs, advisors, academics, and policy makers.

The characteristics of the New Zealand SMEs (question 1), which were of particular interest, include the age profile showing that they were well established (average age 20.8 years), the size profile showing they were relatively large by New Zealand standards (average size 56 FTE, $13.8M gross annual turnover), and the scale of growth over the previous three years demonstrating significant performance improvements (FTE 17%; gross annual turnover 65%). While the study required companies to have some current innovation activity, finding such high levels of innovation activity was surprising. The companies were clearly active innovators based on their focus on new innovations, numbers of new innovations, and levels of investment in new innovations. Interestingly, the propensity to innovate was not based upon size, as there were active innovators of all sizes in this sample of New Zealand SMEs.

In terms of the types of innovation that were being developed (question 2), the results show that all of the New Zealand SMEs had a portfolio of different types of innovations. Of the five innovation types examined, product/service innovations were the dominant type of innovation, with many companies also actively innovating in market development and, to a lesser extent, in process technology. High potential innovations called ‘Champions’ were evaluated for 55% of the SMEs, which reflects the nature of this sample as experienced innovators.

The context for innovation was considered by examining perceptions of a series of external environmental factors (question 3). The top scoring factors were the New Zealand lifestyle, access to high quality research centres, and access to external financing to fund future growth. The three factors which are potentially inhibitors to innovative growth were access to skilled employees, access to managerial staff, and the regulatory framework for business in New Zealand. Significant differences by innovation levels were found for only two contextual factors—external financing access and skilled workforce access.

The status of innovation management processes in innovative New Zealand SMEs was assessed using four key indices for Market, Innovation, Resources and Strategy processes (question 4). The average results were very high across all of these processes, which signals that they are well organised to commercialise their innovations. The ability to manage the processes for developing and implementing new innovations is fundamental for growth of SMEs, and these New Zealand companies were very well positioned for such growth. Significant differences by level of innovation was found for the Resources index and for two of the key factors within this index—adequate staffing resources and adequate financial resources. This finding is consistent with the context results in which staffing and venture capital were identified as being concerns and potentially inhibitors of further innovation and growth.

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

616 CLARK

In terms of innovation theory, the analysis in this paper highlights that active New Zealand innovators do not differ significantly on most of the factors investigated when grouped by number of innovations. The levels of innovation were not significantly different by size (measured by FTE) for these active innovators; although prior research signals that smaller firms will be more likely to have lower levels of innovation due to resource scarcity (proposition P1). Most of the active innovators were developing new innovations with high sales volume and significant RENT potential in spite of their small size and limited resources; whereas, theory suggests that resource constraints could restrict the scale of their innovations so that they focus on those with smaller sales volumes (proposition P2). While differences in perception of the external context for innovation could be anticipated based upon the varying levels of innovation activity (proposition P3), the perceptions of these active innovators did not vary significantly apart from concerns for two of the resource factors (access to external financing and access to skilled workforce). Furthermore, the effectiveness of the innovation management processes for these small active innovators was not directly related to their levels of innovative activity; although small firms with lower levels of innovation could be expected to have more informal processes and, hence, lower innovation diagnostic scores (proposition P4). Finding that these theoretical propositions are not supported shows that the active innovators in this New Zealand study operate differently from other small firms. In particular, these firms can organise their innovation management processes systematically and effectively irrespective of their levels of innovation activity. Yet, further research is needed to understand how small innovative firms obtain the various types of resources needed to develop and implement their innovations.

Implications for Policy

There are lessons to be learnt from these active innovators and a number of implications for policy arising from this study of successful New Zealand companies that are active innovators. These successful innovators are potential exemplars which could be profiled to show other SMEs how to develop and manage a stream of innovations over time. These companies were well established, with a focus on innovation, high levels of commitment to innovate, including financial investments, and a portfolio of innovations on the go. They had the ability to select innovations with high potential returns and were well organised to implement their innovations with high scoring management processes for the Strategy, Market, Innovation and Resource factors involved. These active innovators had developed processes to overcome potential disadvantages of small size and distance from key markets, including strategic focus, reinvestment and use of networks.

Further, it seems timely to review the government support schemes for local innovators, as they were not perceived to be strong. Policy initiatives designed to address the other inhibiting contextual factors will be necessary for the New Zealand government to improve the context for innovation and achieve its economic growth and productivity improvement goals. Specific areas of concern were access to skilled workforce, access to managerial staff, and the regulatory environment. Obtaining sufficient external funding for growth was also found to be an issue for these active innovators, particularly those introducing 6-10 innovations in the previous three years. New Zealand scores well below the OCED average on venture capital as percentage of GDP, overall business investment in R&D is relatively low, and there are limited incentives provided for innovation. As the New Zealand government considers how to reduce the scale of bureaucracy and reviews existing policies and programmes, it will be important to ensure that these findings are considered in order to support and facilitate entrepreneurial and innovative growth of SMEs in the

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 617

future. Furthermore, finding that small active innovators can generate new innovations and bring them to market successfully irrespective of company size augurs well for New Zealand and other small economies with high proportions of SMEs.

Contact

For further information on this article, contact:

Professor Delwyn N. Clark, Associate Dean Research, Waikato Management School, University of Waikato, Private Bag 3105, Hamilton 3240, New ZealandPhone: +67 (7) 838 4594Fax: +67 (7) 838 4063Email: dnclark@mngt.waikato.ac.nz

ReferencesAdams, R., J. Bessant, and R. Phelps. 2006. “Innovation Management Measurement: A Review.” International

Journal of Management Reviews 8(1): 21-47.Agndal, H., and S. Chetty. 2007. “The Impact of Relationships on Changes in Internationalisation Strategies of

SMEs.” European Journal of Marketing 41: 1449-1474. Allocca, M.A., and E.H. Kessler. 2006. “Innovation Speed in Small and Medium Enterprises.” Creativity and

Innovation Management 15(3): 270-295.Branzei, O., and I. Vertinsky. 2006. “Strategic Pathways to Product Innovation Capabilities in SMEs.” Journal of

Business Venturing 21: 75-105.Brooksbank, R., and D. Taylor. 2000. “Marketing in Medium-sized New Zealand Companies: The State of the

Art.” Journal of International Marketing and Marketing Research 25(2): 95-102. Callaghan, P. 2009. Wool to Weta: Transforming New Zealand’s Culture & Economy. Auckland University Press:

Auckland.Campbell-Hunt, C., J. Brocklesby, S. Chetty, L.M. Corbett, S. Davenport, D. Jones, and P. Walsh. 2001. World

Famous in New Zealand: How New Zealand’s Leading Firms Became World-class Competitors. Auckland University Press: Auckland.

CEMI/CEREN. 2006. Case Study Protocol: Strategic Innovation in Small Firms – An International Analysis of Innovation and Strategic Decision Making in Small to Medium Enterprises, CEMI Report 0602, p.39.

Chetty, S., and C. Campbell-Hunt. 2003. “Paths to Internationalization Among Small To Medium-sized Firms: A Global Versus Regional Approach.” European Journal of Marketing 37: 796-820.

Christensen, C.M. 1997. The Innovator’s Dilemma. Harvard Business School Press: Boston, Massachusetts. Christensen, C.M., and M.E. Raynor. 2003. The Innovator’s Solution. Harvard Business School Press: Boston,

Massachusetts.Churchill, N.C., and V.L. Lewis. 1983. “The Five Stages of Small Business Growth.” Harvard Business Review

61(3): 30-50.Corbett, L.M., and C. Campbell-Hunt. 2002. “Grappling with a Gussher! Manufacturing’s Response to Business

Success in Small and Medium Enterprises.” Journal of Operations Management 20: 495-517. Corner, T. 2001. “Improving the Performance of New Zealand SMEs: Measures of Success.” University of

Auckland Business Review 3(2): 2-16.Corner, P., S. Bowden, and D. Clark. 2002. “E-Business Adoption and Strategies in New Zealand SMEs: A

Descriptive Study.” Small Enterprise Research 10(2): 43-61.Coviello, N.E., and K. A-M. Martin. 1999. “Internationalization of Service SMEs: an Integrated Perspective from

the Engineering Consulting Sector.” Journal of International Marketing 7(4): 42-46.Cox, C., and E. Vos. 2005. “Small Business Failure Rates and the New Zealand Retail Sector: Perceptions of

Shopping Mall Managers.” Small Enterprise Research 13(2): 46-58.d’Amboise, G., and M. Muldowney. 1988. Management Theory for Small Business: Attempts and Requirem.”

Academy of Management Review 13(2): 226-240.De Jong, J.P.J., and P.A.M. Vermeulen. 2006. “Determinants of Product Innovation in Small Firms.” International

Small Business Journal 24(6): 587-609. Edmunds, S.W. 1979. “Differing Perceptions of Small Business Problems.” American Journal of Small Business

3(4): 1-14.Edwards, T., R. Delbridge, and M. Munday. 2005. “Understanding Innovation in Small and Medium Enterprises:

A Process Manifest.” Technovation 25: 1119-1127.

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

618 CLARK

EIU (Economist Intelligence Unit). 2008. “New Zealand Economic Background [online].” EIU ViewsWire, [accessed 29 January, 2008]. Available from World Wide Web: http://viewswire.eiu.com/

Fabling, R.B., and A. Grimes. 2007. “Practice Makes Profit: Business Practices and Firm Success.” Small Business Economics 29: 383-399.

Frances, J. 2004. “Institutions, Firms and Economic Growth.” New Zealand Treasury Working Paper 04/19. Wellington, New Zealand.

Freel, M.S. 2000. “Do Small Innovating Firms Outperform Non-Innovators?” Small Business Economics 14(3): 195-210.

Freel, M.S., and P.J.A. Robson. 2004. “Small Firm Innovation, Growth and Performance.” International Small Business Journal 22(6): 561-575.

Friedlander, F., and H.B. Pickle. 1968. “Components of Effectiveness in Small Organisations.” Administrative Science Quarterly 13: 289-304.

Gamota, G., L. Messeri, and B. Lal. 2005. Evaluation of the New Economy Research Fund. Abt Associates Inc.: Cambridge, Massachusetts.

Hamilton, R.T., and L.P. Dana. 2003. “An Increasing Role for Small Business in New Zealand.” Journal of Small Business Management 41(4): 402-408.

Hamilton, R.T., and L. Lawrence. 2001. “Explaining Size Differences in Smaller Firms.” International Small Business Journal 19: 49-60.

Hewitt-Dundas, N. 2006. “Resource and Capability Constraints to Innovation in Small and Large Plants.” Small Business Economics 26: 257-277.

Lawrence, S.R., E. Collins, K. Pavlovich, and M. Arunachalam. 2006. “Sustainability Practices in New Zealand SMEs.” Business Strategy and the Environment 15(4): 242 -257.

Lewis, G. 2008. “Innovation and Productivity: Using Bright Ideas to Work Smarter.” New Zealand Treasury Productivity Paper 08/05. Wellington, New Zealand.

Lewis, K., C. Massey, M. Ashby, A. Coetzer, and C. Harris. 2007. “Business Assistance for SMEs: New Zealand Owner-Managers Make Their Assessment.” Journal of Small Business and Enterprise Development 14(4): 551-566.

Locke. S. 2004. “ICT Adoption and SME Growth in New Zealand.” The Journal of American Academy of Business 4: 93-102.

Locke, S., and F. Scrimgeour. 2003. “Testing the Consistency of New Zealand SME Financial Ratios Across Industry Groups.” The Journal of American Academy of Business 3: 166-173.

Marchese, M. 2009. “Issues Paper.” International Conference on SMEs, Entrepreneurship and Innovation, Villa Manin of Passariano (Udine), OECD LEED Programme.

Markides, C. 1997. “Strategic Innovation.” Sloan Management Review 38: 9-23.Marsh, D., and L. Oxley. 2005. “Modelling Innovative Activity in the New Zealand Biotechnology Sector.”

Mathematics and Computer Simulation 69: 103-112.Martin, P., and P. Bateson. 2007. Measuring Behaviour: An Introductory Guide (3rd ed.). Cambridge University

Press: Cambridge.Massey, C. 2004. “Is the Training Train Out of Control? A Case of Evaluation Failure from New Zealand.”

Journal of Small Business and Enterprise Development 11(4): 458-466. Mazzarol, T., and S. Reboud. 2005. “Customers as Predictors of Rent Returns to Innovation in Small Firms: An

Exploratory Study.” International Journal of Entrepreneurship and Innovation Management 5: 483-494.Mazzarol, T., and S. Reboud. 2006. “The Strategic Decision Making of Entrepreneurs within Small High Innovator

Firms.” International Entrepreneurship and Management Journal 2(2): 261-280.Mazzarol, T., and S. Reboud. 2007. “Innovation Management in Small Firms: A Comparison of French and

Australian Companies.” EFMF 37th Annual Entrepreneurship, Innovation and Small Business Conference, 13-14 September 2007. Ljubljana, Slovenia.

Miller, W.L. 2001. “Innovation for Business Growth.” Research Technology Management 44(5): 26-41.Mills, D., and J. Timmins. 2004. “Firm Dynamics in New Zealand: A Comparative Analysis with OECD

Countries.” New Zealand Treasury Working Paper 04/11, Wellington, New Zealand.Ministry of Economic Development (MED). 2007a. “Statement of Strategic Intent 2007/2010.” Ministry of

Economic Development: Wellington.Ministry of Economic Development (MED). 2007b. “SMEs in New Zealand: Structure and Dynamics.” Ministry

of Economic Development: Wellington.Ministry of Economic Development (MED). 2009. “SMEs in New Zealand: Structure and Dynamics.” Ministry

of Economic Development: Wellington.Ministry of Research Science and Technology (MoRST). 2004. “Growth and Innovation Advisory Board Research

Summary.” Ministry of Research Science and Technology: Wellington.Motwani, J., T. Dandridge, J. Jiang, and K. Soderquist. 1999. “Managing Innovation in French Small and Medium-

Sized Enterprises.” Journal of Small Business Management 37: 106-114.

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014

INNOVATION MANAGEMENT IN SMEs: ACTIVE INNOVATORS IN NEW ZEALAND 619

Nauwelaers, C., and R. Wintjes. 2002. “Innovating SMEs and Regions: the Need for Policy Intelligence and Interactive Policies.” Technology Analysis & Strategic Management 14(2): 210-215.

New Zealand Institute. 2008. “The 2008/09 World Economic Forum Global Competitiveness Report Presentation. [online].” Available from World Wide Web: http://www.nzinstitute.org/Images/uploads/WEF_2009.pdf

North, D., and D. Smallbone. 2000. “The Innovativeness and Growth of Rural SMEs During the 1990s.” Regional Studies 34(2): 145-157.

OECD. 2004. “Promoting Entrepreneurship and Innovative SMEs in the Global Economy.” Second OECD Conference of Ministers Responsible for SMEs: Paris.

OECD. 2007. “High Growth SMEs, Innovation, Intellectual Assets and Value Creation: Literature Review.” CFE/SME(2007)16. OECD: Paris.

O’Regan, N., and A. Ghobadian. 2005. “Innovation in SMEs: the Impact of Strategic Orientation and Environmental Perceptions.” International Journal of Productivity and Performance Management 54(2): 81-97.

O’Regan, N., A. Ghobadian, and M.Sims. 2006. “Fast Tracking Innovation in Manufacturing SMEs.” Technovation 26: 251-261.

Patton, M.Q. 2002. Qualitative Research and Evaluation Methods (3rd ed.). Sage: California.Preston, L.E. 1977. “The World of Small Business: A Suggested Typology.” American Journal of Small Business

1(4): 13-19.Quinn, J.B. 1985. “Managing Innovation: Controlled Chaos.” Harvard Business Review 63(3): 73-85.Ramsey, E., and P. McCole. 2005. “E-Business in Professional SMEs: the Case of New Zealand.” Journal of

Small Business and Enterprise Development 12(4): 528-544.Reboud, S., T. Mazzarol, and T.Volery. 2009. “The French National Innovation System: An International Comparison

of Small Firms.” International Journal of Technology and Innovation Management (forthcoming). Rothkegel, S., L. Erakovic, and D. Shepherd. 2006. “Strategic Alliances Between SMEs and Large Firms: An

Exploration of the Dynamic Process.” Management Revue 17(1): 50-71.Salavou, H., G. Baltas, and S. Lioukas. 2004. “Organisational Innovation in SMEs: The Importance of Strategic

Orientation and Competitive Structure.” European Journal of Marketing 38(9/10): 1091-1112. Santi, M., S. Reboud, H. Gasiglia, and A. Sabouret. 2003. Modèle de valorisation et de protection intellectuelle

des innovations des PEI. July, HEC/INPI: 63 p.Schumpeter, J. 1934. The Theory of Economic Development. Harvard University Press: Cambridge.Simpson, B., J. McGregor, R. Seidel, D. Kolb, J. Henley-King, and D. Tweed. 2000. “Learning in the Manufacturing

Sector.” University of Auckland Business Review 2(1): 39-50.Small Business Advisory Group (SBAG). 2008. “Growing Competitive SMEs.” Report of the (New Zealand)

Small Business Advisory Group, Wellington, 20 p.Smith, K. 2006. “Public Policy Framework for the New Zealand Innovation System.” Ministry of Economic

Development, Occasional Paper 06/06. Wellington, 59 p.Stringer, R. 2000. “How to Manage Radical Innovation.” California Management Review 42(4): 70-88.Tushman, M.L, P.C. Anderson, and C. O’Reilly. 1997. “Technology Cycles, Innovation Streams, and Ambidextrous

Organizations: Organization Renewal Through Innovation Systems and Strategic Change.” In M.L. Tushman, and P.C. Anderson (eds.), Managing Strategic Innovation and Change (pp. 3-23). Oxford: New York.

Tushman, M., and D. Nadler. 1986. “Organising for Innovation.” California Management Review 28(3): 74-92.Van de Ven, A.H. 1986. “Central Problems in the Management of Innovation.” Management Science 32(5): 590-

607.Van Peursem, K.A., and P.K. Wells. 2000. “Contracting Practices in Professional Accounting SMEs: An Analysis

of New Zealand Firms.” International Small Business Journal 19: 68-82.Vos, A., and E. Vos. 2000. “Investment Decision Criteria in Small New Zealand Business.” Small Enterprise

Research 8(1): 44-55.Vos, E., and P. Webber. 2000. “Impact of Receivership Costs on the Optimal Capital Structure for Small

Businesses.” Small Enterprise Research 8(2): 47-55.Vos, E., A. Yeh, S. Carter, and S. Tagg. 2007. “The Happy Story of Small Business Financing.” Journal of

Banking and Finance 31(9): 2648-2672.Welsh, J.A., and J.F. White. 1981. “A Small Business is Not a Little Big Business.” Harvard Business Review

59(4): 18-32.Whitehead, J. 2008. “Putting Productivity First.” Presentation by Secretary of New Zealand Treasury at The

Icehouse, 3 April 2008: Auckland.Winters, R., and E. Stam. 2007. “Innovation Networks of High Tech SMEs: Creation of Knowledge But No

Creation of Value.” Jena Economic Research Papers 2007-42.Wolf, J.A., and T.L. Pett. 2006. “Small-Firm Performance: Modelling the Role of Product and Process

Improvements.” Journal of Small Business Management 44(2): 268-284.

Dow

nloa

ded

by [

The

Aga

Kha

n U

nive

rsity

] at

07:

33 1

9 D

ecem

ber

2014