Innovation Capability and Performance Of Manufacturing SMEs: The Paradoxical Effect of IT Integration

Abstract

In theory, IT integration through applications such as ERP, MRP-II and EDI provides an organization with the ability to exploit innovation capabilities. Based on survey data obtained from 309 Canadian manufacturing SMEs, this study aims to identify the enabling effect of IT integration upon the innovation capability of manufacturing SMEs, that is, in terms of growth and productivity outcomes, and to verify if this effect is subject to industry influences. While the firm's innovation capability was found as expected to be positively related to the growth and productivity of manufacturing SMEs, the results underline paradoxical effects of IT integration in this regard. While IT integration was seen to enable the innovation capability of manufacturing SMEs in terms of growth, it was also seen to have a disabling effect on this same capability with regard to productivity.Keywords: innovation capability, product innovation, process innovation, IT integration, R&D, growth, productivity, innovation, SME, paradox 2 Innovation Capability and Performance of Manufacturing SMEs:The Paradoxical Effect of IT Integration AbstractIn theory, IT integration through applications such as ERP, MRP-II and EDI provides an organization with the ability to exploit innovation capabilities. Based on survey data obtained from 309 Canadian manufacturing SMEs, this study aims to identify the enabling effect of IT integration upon the innovation capability of manufacturing SMEs, that is, in terms of growth and productivity outcomes, and to verify if this effect is subject to industry influences. While the firm's innovation capability was found as expected to be positively related to the growth and productivity of manufacturing SMEs, the results underline paradoxical effects of IT integration in this regard. While IT integration was seen to enable the innovation capability of manufacturing SMEs in terms of growth, it was also seen to have a disabling effect on this same capability with regard to productivity.Keywords: innovation capability, product innovation, process innovation, IT integration, R&D, growth, productivity, innovation, SME, paradox IntroductionInnovation has long been considered as the key factor for the survival, growth and development of small and medium-sized enterprises (SMEs) (Acs and Audretsch, 1990;Becheikh, Landry and Amara, 2006). Developing their capacity to innovate is a mission-critical task for all organizations. Given the specificities of SMEs with regard to their environment, strategy, structure and technology, more research in this specific context is thus needed, including information technology (IT) in particular (Gable and Stewart, 1999;Premkumar, 2003). These specificities also imply that research findings in the large enterprise context do not automatically extend to small companies (Thong, Yap and Raman, 1996;Pflughoeft et al., 2003). As SMEs differ from large organizations, a greater innovation capacity is deemed to counterbalance their greater vulnerability in a global business environment and in ...

Performance Perspectives for Small and Medium Enterprises in Cameroon: Innovation and ICTs

“…This result shows the need for these companies to accompany their innovation strategies by investments in ICT or a reinforcement of the use of information technologies already present. These results are in line with those of Dibrell et al, (2008) and of Raymond et al, (2013) on Canadian SMEs. If ICTs offer benefits such as efficiency, decision-making support and increased communication, the effect of innovation on performance can not be right without being accompanied by TIC.…”

“…The description of an effect of synergy between ICTs and innovation is in fact in line with the results of Huang and Liu (2005) on large companies. These results are Raymond et al, (2013) on a sample of Canadian SMEs. The use of ICT tools specifically mobilized within the framework of innovations supports the operational activities.…”

“…To improve or control this performance, it is possible to act on 4 principal axes: to be to "horse" enters external space and intern to optimize the productivity, to install indicators of rigorous and specific performance, a collaborative management and to develop a creative know-how of performance. Raymond et al, 2013) show that the interaction between the capacity of innovation of companies and their ICT capital is positively related to performance. In line with the latter, Ben Aoun et al, (2010) within the framework of the working group of OECD on Luxembourg firms conclude on a positive relationship between the use of ICTs and the propensity to innovate.…”

L'innovation en PME et son accompagnement par les TIC : quels effets sur la performance ?

“…Les travaux récents de Kmieciak et al (2012) et Raymond et al (2013) sont plus réservés quant à la contribution des TIC. L'étude de Kmieciak et al (2012), par régression multiple sur les données de 109 PME polonaises, ne confirme pas le fait que la capacité en TIC modère la relation entre l'innovativité et la performance de la firme.…”

“…Concrètement, ce rôle des TIC comme levier provient de leur capacité à accélérer le processus d'innovation ou à favoriser la capitalisation des savoirs R&D de l'entreprise (Pavlou et El Sawy, 2006) ou bien encore de leur capacité à mieux identifier les besoins émergents du marché (Tambe et al, 2012). Plusieurs travaux ont cherché à expliquer comment la propension des entreprises à associer leur capacité d'innovation à leur usage des technologies de l'information pouvait affecter leur performance (Huang et Liu, 2005 ;Dibrell et al, 2008 ;Kmieciak et al 2012 ;Raymond et al, 2013). Notre recherche s'inscrit dans le prolongement de ces travaux, en étudiant le cas des Petites et Moyennes Entreprises, c'est-à-dire le cas d'un fonctionnement organisationnel spécifique (Marchesnay, 1991).…”