1. Introduction
Brychan Thomas, Christopher Miller and Lyndon Murphy
“Innovation is the central issue in economic prosperity”
MICHAEL PORTER (1947-)
This chapter at a glance
Innovation and Small Business
Small Business Innovation Networks
Organisation of the Book
Innovation and Small Business
Small businesses are making an important contribution to the development of technological innovation within industries at regional and national levels. In fact, the European Commission (EC, 1993, 1994, 2007) has reported that this sector probably holds the key to the future renewal and growth of Europe. According to the EC small businesses are enterprises employing fewer than fifty people, with an annual
turnover/balance sheet total not exceeding ten million euro (EC, 2005). Innovation can be defined as either the ‘application of a new method or device’ (Collins, 1997) or the ‘successful exploitation’ of a new idea (Thomas and Rhisiart, 2000). According to Baregheh et al. (2009) innovation is ‘the multi-stage process whereby organisations transform ideas into new/improved products, services or processes, in order to advance, compete and differentiate themselves successfully in their marketplace’.
Whereas the advantages of small businesses in innovation are largely associated with flexibility,
dynamism and responsiveness (Rothwell, 1994), the disadvantages are often related to a lack of financial and technological resources. This can lead to problems in their capability to absorb and diffuse technology within industrial sectors. This is a major problem in the development of the small business sector in many UK regions, especially as external inputs are of greater importance for the small firm than for the large firm during the innovation process (Allen et al., 1983). With the different levels of regional industrial development within Europe there will also be variations in the importance of innovation support to the small business (Saxenian, 1991). This inequality can make access to knowledge, technology and human resources more difficult, and will affect not only the development of small businesses within regions, but also the efficiency and effectiveness of the regional innovation system. Regional policy needs to respond to these variations, and develop innovation support networks that are sensitive to the needs of small business.
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Innovation and Small Business: Volume I