employing technology & innovation in sme development r. a. attalage university of moratuwa...

Employing Technology & Employing Technology & Innovation in SME DevelopmentInnovation in SME Development

R. A. AttalageUniversity of Moratuwa

1Employing Tech & Innovation in SME Dev

Context• SMEs in SL accounts for 80% of all businesses• SMEs are found in all sectors of the economy and

responsible for the economic growth and this is recognized by the Govt.

• SMEs employ skilled, semi-skilled and unskilled people (35% of employment)

• SMEs cover Agriculture, Manufacturing and Service sectors (more than 90% of business establishment)

• SME policies target developing entrepreneurial skills and innovation


Context…contd.

• Currently proposed policies of SMEs promotion is through skill & entrepreneurship development, quality of employment, tax concessions, marketing & access to finance

• Has potential for substantial employment growth and wealth creation in SL

• Appropriate and Inexpensive technologies are critical to SMEs


Context…contd.• In developing countries, university-Industry linkages

are important means to transfer local knowledge and to supplement the acquisition and adaptation of international knowledge and technologies

• Developed countries employ intermediaries in tech development, transfer, research etc.

• Concept of Triple Helix manifesting technology transfer, incubators for creating technology based enterprises, science parks are essential for SME development

• Due to the nature of business of SMEs, Industry Associations, Cluster concept could play an effective role


Some….Key Issues

• Low level of awareness on available technologies and access to them

• Low capacity in adapting modern, competitive, efficient technologies

• Low level of services provided in technology transfer and advice

• Limited access to finances• Lack of national level synergetic, integrated, focused

platforms for SME development


Middle Income Trap• Countries with per capita income between $ 5,000-

10,000 said to be caught in the middle income trap.

• Around 100 countries have made the transition from low to middle income during the last 65-70 years. But many could not make from middle to high income.

• A low income country can be relatively easily started-up due to advantages in labour, trade & financial and concessions.

• Moving from middle to high income is more challenging and difficult.


Escaping Middle Income Trap• Technology, innovation and knowledge are crucial

drivers of development

• Technology, innovation and knowledge have enabled the BRICs and HPEs to develop

• Technology, innovation and knowledge are important in the transition out of the middle income trap and towards developed country status

• The role of universities is particularly important – as in Sri Lanka at present - technology and innovation increasingly drive economic growth.


Escaping Middle Income Trap

• Economies have to move up the technology ladder and to find markets that can absorb the new openings. This means innovation, R and D and new export markets

• Universities could be possess potential reservoir of knowledge which the SMEs must leverage for innovation, R and D and new export markets

• In view of the SME’s role in the economy, its part w.r.t technology & innovation becomes essential than ever before


Increasing importance of Innovation Increasing importance of Innovation

Pre IndustrialStage

Initial FDI Engagement

Tech Absorption & adaption

Internalizing Skills and Technology

Internalizing Innovation

• Subsistence agriculture

• Raw material export

• Aid dependency

• Subsistence agriculture

• Raw material export

• Aid dependency

• Full technology & innovation capabilities

• Create innovation & Technologies

• Global positioning of a range of product

EU, Japan, USA here

• Full technology & innovation capabilities

• Create innovation & Technologies

• Global positioning of a range of product

EU, Japan, USA here

• Simple manufacturing

• Some Processing of Raw Materials

• FDI in material Processing and service sectors

• Simple manufacturing

• Some Processing of Raw Materials

• FDI in material Processing and service sectors

• Export based growth increases

• OEMs Attracted• Globally competitive

value chains emerge• Knowledge driven

business• Private investment

greater than ODA

• Export based growth increases

• OEMs Attracted• Globally competitive

value chains emerge• Knowledge driven

business• Private investment

greater than ODA

•Management & Technology masterd•Production of high quality goods•Companies go to scale- globalise

BRICS countries here

•Management & Technology masterd•Production of high quality goods•Companies go to scale- globalise

BRICS countries here

Thailand, Chilie, Malayasia- Sri Lanka entering this stage

22

11

33

44

55

Importing Technology to Incremental InnovationImporting Technology to Incremental InnovationLittle InnovationLittle Innovation 9

Source: SQW

Employing Tech & Innovation in SME Dev

Innovation System in Transitional Countries

Source: Innovation policies: A guide for developing countries. World Bank. 2010 10Employing Tech & Innovation in SME Dev

Universities with SMEs

• “Ultimately, most of the technological advances that have economic consequences can be traced indirectly or directly to universities, either through the training provided, the knowledge spillovers, or the actual research conducted or through UILs (University-Industrial Links) that enabled firms and faculty members to collaborate in the development of technologies.”

• “The vast majority of universities (in developing countries) are not in a position to engage in research or to forge links with industry other than those created by individual consulting assignments. They are too small or have too shallow a pool of research talent to create viable, effectively managed teams, or they are focused on teaching.”

Source: How Universities Promote Economic Growth: Shahid Yusuf and Kaoru Nabeshima, Chapter 1, Policy Dimensions, World Bank, 2007


Model for Links with Universities


Introduction of Technology and Innovations into the economy

• An economy gradually has to become able to produce its own technologies and innovations, and thus transit towards developed country status, focusing on its competitive advantages, identified markets, risk assessment

• Developing novel products and new ways of product and service delivery in developing countries for their use in both developing and developed markets.


Need of an Innovation Eco System

• Innovation Eco system is needed as Businesses do not absorb technology, innovations and knowledge in isolation, but within a ‘system’

• Education system, financial systems, and competition policy and Intellectual property rights, influence the ability of a firm to absorb and use technology, innovations and knowledge profitably.


End of PresentationEnd of Presentation


employing technology & innovation in sme development r. a. attalage university of moratuwa...

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