Innovation in Micro and Small Enterprises: Resources and Capabilities

Abstract

Objective: the article aims to identify the relevant resources for the composition of managerial and transactional capabilities in the context of micro and small enterprises (MSEs). Method: through a literature review, the resources associated with the innovation were identified: leadership, people management, information and knowledge, relationships with clients, suppliers, and society, and results. The resources were collected and measured using a structured questionnaire made available by the Local Agent for Innovation program, applied to 447 MSEs in the state of Pernambuco, between 2015 and 2017. Confirmatory factor analysis was used to verify how these resources contribute to the composition of capabilities. Results: the results demonstrate that the managerial capability is composed of the relationship with society and suppliers, leadership, the sharing of information and knowledge, and people management. Transactional capability is made up of the relationship with customers and the results obtained by the firm. Conclusions: although MSEs have restrictions on access to technologies, their organizational resources seem to contribute to the development of innovation capability and to obtain competitive advantage.

Analysing the influence of digital strategy and innovation on MSMEs' performance in emerging countries

“…The organizational aspects of our digital strategic orientation variable indicate that training, awareness, evaluation, updating and organizational changes foster MSME innovation. Our results also show that innovation can enable better performance in small firms (Chen & Kim, 2023; Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García‐Pérez‐de‐Lema et al, 2016), confirming H2b (coefficient .414).…”

“…Migration to modern innovation-based business models or innovation processes with investment in digital platforms also supports the marketing and sale of goods and services (Alam et al, 2022;Valdez-Juárez et al, 2022). When innovation is aligned with customers' demands (Bouwman et al, 2019) (Chen & Kim, 2023;Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García-Pérez- de-Lema et al, 2016), confirming H2b (coefficient .414).…”

“…In light of this result, we can affirm that innovation offers a competitive advantage over those who do not innovate (Carvalho, Ribeiro, Cirani, & Cintra, 2016). The capabilities derived from innovation can also influence business performance (Vasconcelos et al, 2021).…”

Analysing the influence of digital strategy and innovation on MSMEs' performance in emerging countries

“…The organizational aspects of our digital strategic orientation variable indicate that training, awareness, evaluation, updating and organizational changes foster MSME innovation. Our results also show that innovation can enable better performance in small firms (Chen & Kim, 2023; Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García‐Pérez‐de‐Lema et al, 2016), confirming H2b (coefficient .414).…”

“…Migration to modern innovation-based business models or innovation processes with investment in digital platforms also supports the marketing and sale of goods and services (Alam et al, 2022;Valdez-Juárez et al, 2022). When innovation is aligned with customers' demands (Bouwman et al, 2019) (Chen & Kim, 2023;Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García-Pérez- de-Lema et al, 2016), confirming H2b (coefficient .414).…”

“…In light of this result, we can affirm that innovation offers a competitive advantage over those who do not innovate (Carvalho, Ribeiro, Cirani, & Cintra, 2016). The capabilities derived from innovation can also influence business performance (Vasconcelos et al, 2021).…”

Confronting Digital Strategic Orientation and Digital Technologies on MSMEs' Performance in Emerging Countries

“…2019; Vasconcelos et al. 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”

“…Furthermore, an innovative climate (TOE organizational aspect) encourages a creative culture and willingness to accept change (TAM individual aspects). Therefore, innovation can also yield new internal capabilities, which may become an important intangible resource (Urbinati et al 2019;Vasconcelos et al 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”

Analysing the influence of digital strategy and innovation on MSMEs' performance in emerging countries

“…The organizational aspects of our digital strategic orientation variable indicate that training, awareness, evaluation, updating and organizational changes foster MSME innovation. Our results also show that innovation can enable better performance in small firms (Chen & Kim, 2023; Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García‐Pérez‐de‐Lema et al, 2016), confirming H2b (coefficient .414).…”

“…Migration to modern innovation-based business models or innovation processes with investment in digital platforms also supports the marketing and sale of goods and services (Alam et al, 2022;Valdez-Juárez et al, 2022). When innovation is aligned with customers' demands (Bouwman et al, 2019) (Chen & Kim, 2023;Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García-Pérez- de-Lema et al, 2016), confirming H2b (coefficient .414).…”

“…In light of this result, we can affirm that innovation offers a competitive advantage over those who do not innovate (Carvalho, Ribeiro, Cirani, & Cintra, 2016). The capabilities derived from innovation can also influence business performance (Vasconcelos et al, 2021).…”

Confronting Digital Strategic Orientation and Digital Technologies on MSMEs' Performance in Emerging Countries

“…2019; Vasconcelos et al. 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”

“…Furthermore, an innovative climate (TOE organizational aspect) encourages a creative culture and willingness to accept change (TAM individual aspects). Therefore, innovation can also yield new internal capabilities, which may become an important intangible resource (Urbinati et al 2019;Vasconcelos et al 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”

Analysing the influence of digital strategy and innovation on MSMEs' performance in emerging countries

“…The organizational aspects of our digital strategic orientation variable indicate that training, awareness, evaluation, updating and organizational changes foster MSME innovation. Our results also show that innovation can enable better performance in small firms (Chen & Kim, 2023; Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García‐Pérez‐de‐Lema et al, 2016), confirming H2b (coefficient .414).…”

“…Migration to modern innovation-based business models or innovation processes with investment in digital platforms also supports the marketing and sale of goods and services (Alam et al, 2022;Valdez-Juárez et al, 2022). When innovation is aligned with customers' demands (Bouwman et al, 2019) (Chen & Kim, 2023;Vasconcelos et al, 2021). In emerging countries, such as Peru, the greater the innovative activity in the products or services offered by MSMEs, the better their performance (García-Pérez- de-Lema et al, 2016), confirming H2b (coefficient .414).…”

“…In light of this result, we can affirm that innovation offers a competitive advantage over those who do not innovate (Carvalho, Ribeiro, Cirani, & Cintra, 2016). The capabilities derived from innovation can also influence business performance (Vasconcelos et al, 2021).…”

Confronting Digital Strategic Orientation and Digital Technologies on MSMEs' Performance in Emerging Countries

“…2019; Vasconcelos et al. 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”

“…Furthermore, an innovative climate (TOE organizational aspect) encourages a creative culture and willingness to accept change (TAM individual aspects). Therefore, innovation can also yield new internal capabilities, which may become an important intangible resource (Urbinati et al 2019;Vasconcelos et al 2021). Based on digitalization, MSMEs can develop innovative solutions; for example, by including big data in strategic decisions or using digitized interactive platforms to connect with the market (Sorescu and Schreier 2021).…”