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Much of the academic research undertaken on innovation is based on large organizations. Some of the factors that influence the performance of this process include organizational culture, government policies and support mechanism, structural framework, investment communities, intellectual property protection, financial stability, research-industry relationships, the organization’s financial profile and stability, economic and corporate environment. However, there is increasing evidence to show that the most innovative and fast growth enterprises are from the Small-to-Medium Enterprise (SME) sector, such as small manufacturers who are operating with flexibility and innovation in niche markets within a very competitive global market place.
There is also increasingly improved structural support for these small enterprises from governments at all levels. However, such programs are often unable to flow down to the micro-manufacturers (less than yearly AUD 2 Million turnover per year), and access to relevant field officers for assistance are often very difficult especially within regional areas.
This poses an interesting scenario where it is often very difficult for these SMEs to access the available financial and non-financial assistance for their innovation activities. Because they are dependent on cash flow from existing operations as their innovation funding source (Featherstone, 2008), the incentives for SMEs to invest in innovation are diminished.