ma business and management dissertation

A study of how the drivers of innovation contribute to successful business

performance within SMEs around the South West.

James Macdonald

A DISSERTATION Submitted to

Bath Spa University In partial fulfilment of the requirements for the degree of

MA Business and Management

3rd October 2013

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A Dissertation entitled

A study of how the drivers of innovation contribute to successful business

performance within SMEs around the South West.

By

James Macdonald

We hereby certify that this Dissertation submitted by James Macdonald

conforms to acceptable standards, and as such is fully adequate in

scope and quality. It is therefore approved as the fulfilment of the

Dissertation requirements for the degree of MA Business and

Management.

Approved:

Dissertation Supervisor

Date

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DECLARATION

I hereby certify that this dissertation constitutes my own product, that where the language of others is set forth, quotation marks so indicate, and that appropriate credit is given where I have used the language, ideas, expressions or writings of another.

I declare that the dissertation describes original work that has not previously been presented for the award of any other degree of any institution.

Signed,

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Acknowledgments

I would like to thank all the companies and individuals that participated in my

research for their time and trouble. I would also like to thank my supervisor John

Middleton for his advice and expertise. I would like to thank my family for their advice

and support.

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Abstract

This study identifies the use of innovation within small to medium sized enterprises

(SMEs). The aim of the research is to examine how innovation can provide

opportunities to SMEs. It provides a theoretical framework of the main elements of

innovation. It has identified how SMEs adopt innovation to ensure growth and

improved performance. The study addresses the use of management techniques,

which encourage competitive advantage. The research pursued opinions of local

entrepreneurs and businesses through semi-structured interviews. Online surveys

were also used to collect a greater proportion of data. The findings suggest that

innovation can increase profitability and growth. It also stated innovation improves

sustainability and working conditions. The research has identified gaps such as

leadership and organisational culture that are important to the process of innovation.

The study is limited by the number of participants who attempted the online survey

and the number of companies who were interviewed, it however contributes to the

understanding of innovation within SMEs. To conclude, SMEs must attempt to

identify and implement alternative ways of business for profit and sustainability.

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Table of Contents

Acknowledgments ...................................................................................................................... 3

Abstract ...................................................................................................................................... 4

1.0 Introduction .......................................................................................................................... 8

1.1 Research Background...................................................................................................... 8

1.2 Research Aim................................................................................................................. 11

1.2.1 Research Question 1:.............................................................................................. 11





1.3 Research Focus and Scope .............................................................................................. 12

1.4 Research Methodology ...................................................................................................... 13

1.5 Structure of the study......................................................................................................... 14

2.0 Literature Review ............................................................................................................... 16

2.1 The Drivers of Innovation ............................................................................................... 16

2.2 Innovation Capacity........................................................................................................ 18

2.3 Measuring Innovation..................................................................................................... 20

2.4 Total Quality Management (TQM) ................................................................................. 22

2.5 Business Process Re-engineering (BPR) ..................................................................... 24

2.6 Six Sigma ....................................................................................................................... 26

2.7 Radical and Disruptive Innovation ................................................................................. 28

2.8 Incremental Innovation................................................................................................... 30

2.9 Diffusion of Innovation ................................................................................................... 32

2.10 Summary ...................................................................................................................... 34

3.0 Research Methodology and Methods................................................................................ 35

3.1 Research Purpose ......................................................................................................... 35

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3.2 Research Approach ....................................................................................................... 36

3.3 Research Strategy ......................................................................................................... 38

3.4 Sample Selection ........................................................................................................... 39

3.5 Data Collection Methods ................................................................................................ 41

3.6 Data Analysis ................................................................................................................. 43

3.7 Quality Criteria and Ethical Consideration ..................................................................... 46

3.8 Summary ........................................................................................................................ 47

4.0 Data Presentation .............................................................................................................. 49

4.1 Online Survey Presentation ........................................................................................... 49

4.1.1 Results ..................................................................................................................... 50

4.1.2 Summary.................................................................................................................. 59

4.2 Semi-Structured Interviews Presentation ...................................................................... 60

5.0 Analysis .............................................................................................................................. 67

6.0 Conclusion ......................................................................................................................... 75

6.1 Answer to Research Aim ............................................................................................... 75

6.2 Overall Conclusion ......................................................................................................... 77

6.3 Contributions .................................................................................................................. 79

6.4 Limitations and Future Research................................................................................... 79

6.5 Recommendations ......................................................................................................... 80

6.6 Chapter Summary .......................................................................................................... 81

7.0 Reference List .................................................................................................................... 82

8.0 Appendices ........................................................................................................................ 86

8.1 Appendix 1 ..................................................................................................................... 86

8.2 Appendix 2 ..................................................................................................................... 97

8.3 Appendix 3 ..................................................................................................................... 98

8.4 Appendix 4 ..................................................................................................................... 99

8.5 Appendix 5 ....................................................................................................................100

8.6 Appendix 6 ....................................................................................................................101

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8.7 Appendix 7 ....................................................................................................................102

8.8 Appendix 8 ....................................................................................................................103

8.9 Appendix 9 ....................................................................................................................104

8.10 Appendix 10 ................................................................................................................105

8.11 Appendix 11 ................................................................................................................106

8.12 Appendix 12 ................................................................................................................107

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1.0 Introduction

The purpose of this research is to identify how small and medium sized enterprises

(SMEs) use innovation to generate growth and improve performance. The idea was

generated from the recent recession, during which small businesses had to adopt

innovation, creativity and change business policies to ensure their survival during

times of hardship. The potential benefits of the research will identify that the process

of innovation is a fundamental business component that maximises growth and

future sustainability. According to Tidd et al. (2010) 'Innovation is a key factor for a

company to survive and grow in the long run.' It is therefore essential that SMEs

utilise the concept of innovation and maintain its importance.

There are positive and negative effects that could hinder the result for successful

future growth. A business should innovate to improve itself continuously to meet the

demands of new markets and competitors which may threaten future sustainability

and growth.

This research will highlight the essential elements of innovation and discover the

opinions of local SMEs to identify its main processes and achievements.

1.1 Research Background

Innovation is a modern business concept that identifies gaps in the marketplace, and

when utilised effectively can enhance the growth and performance of an

organisation. This concept is popular within small to medium sized enterprises,

although many organisations are limited as to its use because of capacity and risk;

larger companies are able to afford having greater resources.

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The research will attempt to analyse what the main drivers of innovation are,

the processes of innovation and the capacity to attempt innovation within the

marketplace. It will identify that it is not primarily large enterprises that innovate to

generate growth, but also SMEs.

Innovation is defined by Drucker (1985) as 'the act that endows resources with a new

capacity to create wealth.' This definition tries to show that innovation is primarily

adopted to create wealth and is more specifically an attempt to build opportunities.

Tidd and Bessant (2010) suggest that 'the skill to spot opportunities and create new

ways to exploit them is at the heart of the innovation process.' This definition is an

accurate account of what innovation within a business seeks to achieve. This piece

of research shows, innovation within SMEs is a driver for economic growth.

According to Henderson (2002:316) 'entrepreneurs create new jobs, increase local

incomes and wealth and connect the community to a larger global economy.

Innovation is therefore a driver for economic growth and by utilising the concept

within SMEs, it will benefit society. That is why it is necessary and meaningful for this

research to be conducted.

The overall motivation of the research is to discover how small businesses use

innovation within their core competences to improve their position in the marketplace

and overcome obstacles which large businesses are better able to overcome. SMEs

must innovate in an effort to guarantee survival, especially during and after an

economic crisis and to prevent saturation of their markets. This is a relevant situation

facing all businesses across the United Kingdom and probably the whole European

Union for that matter and as mentioned by Oke et al. (2007), 'In the UK at least it is

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clear that policy makers see an important link between innovation and business and

economic growth.'

The piece of research will address relevant theories of innovation and

operational strategy to ascertain how SMEs can improve performance. The main

topics of relevance, examined in greater detail within the literature review, will

attempt to understand the drivers of innovation, the capacity for SMEs to innovate

and the risks which face organisations. The different processes of innovation such as

radical innovation and incremental innovation, are explained in detail within the

literature review. The research will target local SMEs, primarily through interviews

and online surveys, using social media such as “Linkedin” to collect opinions of

professionals.

There are a number of local businesses available to collect this information from and

it is feasible to conduct an analysis over a fifteen-week period. The only issue for

access is the co-operation, enthusiasm and availability of time for SMEs to

undertake interviews and whether or not they are prepared to reveal company

information. The research will address whether or not innovation is key to ensure

SME sustainability. This is outlined within the research aim and questions in the next

section.

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1.2 Research Aim

Based on the above background, this research aims to ascertain whether SMEs

understand that initiating an effective operations strategy is not enough to respond to

competitive threats and change; the organisation must be capable of innovating new

products and services to meet growing demands and competitive threats. The

purpose of this research is to attempt to understand how SMEs use and develop

innovation processes, plus how this understanding will impact on business financial

performance. It will also address the barriers to innovation and discuss the reason

for them.

To achieve this, research questions are formulated as follows:

1.2.1 Research Question 1:

How does innovation improve performance and sustainability within SMEs?


How do SMEs conduct innovation within their operations, and does the use of Total

Quality Management, Six Sigma and Business Process re-engineering encourage

innovation?


Does innovation place a burden on SMEs, which will ultimately distract the

organisation from its core competences and hinder its performance?

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What are the main drivers of innovation and why should SMEs explore innovation?


Does an SME require sufficient capacity to enable an organisation to innovate? What

is required to develop innovation and make it work for an organisation?

1.3 Research Focus and Scope

The overall focus of the research will attempt to analyse a number of local small to

medium enterprises and analyse the driving factors behind innovation, whether or

not they have succeeded in generating performance. It will assess if the company

has used innovation successfully and why others have not attempted to use it at all.

Overall the research will help to identify if innovation increases operational efficiency,

reputation or image, improving business financial performance.

The research will not only consist of interviews to obtain these opinions from

SMEs, but also attempt to analyse how other professionals see innovation as a

business function. This will be collected through an online survey and will be used to

fulfil the research questions. The surveys will, again, try and pinpoint what the main

drivers of innovation are, the risks that are involved within the process, what

innovative processes are used and the capacity to innovate. The data collection

involved will seek the opinions of individuals within business and local businesses

themselves in order to achieve a wider range of opinions.

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The scope of the research is targeted at a few local businesses, which are expected

to provide a broad understanding of the functions of innovation within the South

West and South Wales. An Online survey will also be used to obtain data from more

professionals whose opinions will hopefully provide richness to the research.

The study will then use the information formulated within the literature review in

chapter four to form an evaluation of the findings. This will initiate an analysis that

will indicate if any gaps in the research have been filled or not as well as any

criticisms that have been made.

1.4 Research Methodology

This section will be covered in chapter three of the research and embodies the

principles and methods of the research that will be conducted to form an analysis.

The research is designed so that it utilises both qualitative and quantitative aspects

of research under an interpretivist paradigm. It will be conducted through the use of

online surveys and semi-structured interviews to understand the views of innovation

over a wide scale and how it is used within a business. Both sources of sampling are

designed for one to compensate the other, so the benefits of both are utilised to

improve the scope and viability of data. This will produce a greater amount of data to

ensure the analysis is sufficiently rich of strong opinions and viewpoints. The

potential problems with the survey are a poor response rate from the number of

individuals and during the interviewing the responses may deviate from the purpose

of the research aim. The results of the data will be categorised into relevant themes

and will be analysed on the opinions of the individuals. The analysis will then attempt

to ascertain what kinds of patterns and themes of response are emerging. The

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findings will be presented within tables and pie charts at the appendix to give the

reader a visual interpretation of the data when reading through the analysis.

1.5 Structure of the study

Chapter 1: Provides an introduction which identifies what the research entails

as well as defining the purpose of the research. This chapter outlines the

research aim and questions, as well as addressing how the research will be

conducted. It will introduce the necessary research methodologies used to

conduct the study before undertaking the analysis. Innovation will be defined

as well as an interpretation of academics who have previously studied the

subject.

Chapter 2: This chapter explains the literature that will attempt to answer the

set research aim and questions. It will attempt to form an evaluation and

explain its importance analysing the research. The purpose of this chapter is

to convey viewpoints and academic theories of innovation. Each theory will be

assessed and critically analysed. An overall analysis of the empirical research

and the literature review will be discussed within chapter four.

Chapter 3: Explains the research methodology and will define what types of

research will be used to justify an overall analysis and an explanation of the

most effective sample selections. It will also attempt to discuss what data

collection methods will be used, how effective they are, identify the limitations

and how those limitations can be reduced. The chapter will then summarise

what the research will entail and benefit the overall analysis.

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Chapter 4: Gathers all the data collected from the online surveys and

interviews to evaluate the findings and depict any trends. It will present the

findings in a logical order to processes a clear interpretation.

Chapter 5: Analyses all the data collected and presented within chapter four.

The overall function of this chapter will use the results to form an analysis

using theoretical arguments described within the literature review.

Chapter 6: Concludes the research and analysis and summarises the findings.

It will also attempt to outline any limitations and suggest recommendations

that could be useful to the organisations that were used within the research.

The research will be summarised in this chapter and comments will be made

on possible future research and suggestions for the companies that have

been interviewed.

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2.0 Literature Review

2.1 The Drivers of Innovation

To understand how organisations innovate it is essential to examine what drives

them to innovate. According to the available literature, which suggests that there are

five main drivers of innovation, namely competitive advantage, improving

performance and growth, product development, survival and technological change.

The purpose of evaluating the main drivers is to answer research question four.

The main driver for businesses to innovate is to seek a competitive edge within the

marketplace, which will offer them a chance to achieve growth. According to Scozzi

and Garavelli (2005:122), ' Innovation is the main source of competitive advantage

for many organisations.' This is a driving force behind innovation, however it

depends on the current market environment. It has been suggested by Salavou et al.

(2004) that 'firms operating in more competitive environments, with lower density and

lower barriers to entry, tend to have better performance in product innovation.' This

means that companies which innovate in competitive environments will have greater

success due to fewer barriers to entry. This interpretation of the market environment,

does not however justify a company’s decision to innovate and could in fact lead to it

refraining from innovating, due to competitive pressures from globalisation that is the

build-up of foreign competition.

It is not only a competitive advantage that companies seek, but gaining

company growth is a major driver behind innovation. According to de Jong and

Marsili (2006) 'small firms which innovate increase their chances of survival and

growth.' It is the ability to preserve viability as long as possible and remain

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sustainable that is a major driving force behind innovation. This is particularly

relevant to small companies who are forced to develop sustainable ideas. The desire

to achieve sustainable growth will only be successful if the companies adopt certain

attitudes that will facilitate success. According to Ozsomer et al. (1997) firms which

achieve growth are 'innovative companies with a proactive strategic posture,

aggressive firms, competitive and risk takers.' It is essential that with these

characteristics innovative companies can achieve success through innovation.

Improving products is also a driver to innovation and as mentioned by Oke et

al. (2007) 'product innovation, which may include new product offerings or

improvements in existing products, appears to be the most common form of

innovation.' It has been suggested by Mosey (2005:114) that 'new product

development, suggesting product innovation activities are the cornerstone of better

performing companies and those with ambitious growth targets.' This ascertains that

product development is a driver of innovation because it generates substantial

growth appealing to many organisations; however this can only be achieved if the

company has sufficient capacity, both financial and structural, to initiate product

development.

The overall drivers to innovation are namely competitive advantage, improved

performance and growth, product development, survival and technological change.

These encourage companies to innovate and maximise their potential within the

marketplace, however, this can only be achieved through a collaboration of

commitment, determination and strong organisational culture.

This answers research question four, which asks what are the main drivers of

innovation and why SMEs should explore innovation. The drivers of innovation will

be analysed to depict the incentive SMEs have to become innovative. It is essential

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for many SMEs to use innovation essentially to maintain their place within the

marketplace and hopefully, survive if they are struggling to remain viable. It all

depends however on the ability of an SME to obtain the necessary capacity to

innovate before it can begin to think about implementing any innovation.

2.2 Innovation Capacity

Research question five asks if capacity is required for an SME to innovate.

Innovation capacity is referred to as 'a continuous improvement of the overall

capability of firms to generate innovation for developing new products to meet

market needs' as mentioned by Szeto (2000:149). Innovation can only occur if the

capacity to innovate exists within the company, otherwise it would hinder business

financial performance according to Laforet (2010:383). This would benefit the entire

research and development process to allow innovation to proceed. It either entails

the amount of resources required or a combination of suitable training and

experience of staff to participate in innovation. It is an important priority for

organisations to continuously improve their product and range of services to produce

new innovative developments.

However it is usually only viable to improve capacity when companies have

the financial resources and access to highly skilled staff. Such attributes are

available to larger firms, due to the staff numbers and access to financial resources.

It goes almost without saying that access to a highly skilled workforce is important to

generate and facilitate innovative ideas. It has been suggested by Dimov and

Shepherd (2005) that 'a key component of human capital is the possession of

specific knowledge, which yields competitive advantage and therefore, the types of

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education, and experiences of employees are important in assessing high

performing companies.' This reinforces the notion that the capacity for an

organisation to innovate, depends on the skills of the workforce.

If a skilled workforce or any workforce does not have the ability to adapt to

change then innovation will not occur. According to Humphries et al. (2005)

'Implementing and developing the innovation process requires energy to overcome

the resistance to change.' An organisation’s capacity is therefore restricted if there is

no willingness to change and adapt to new innovations. It is vital that in order for an

organisation to have the ability to change, a new culture must be created. The way to

bring about innovative based change according to Beer et al. (1993) is to first

change staff behaviour, which will consequently lead to changes in desires and

attitudes. This will lead to a greater belief that change is necessary, thus benefiting

the overall capacity to innovate. It must be argued though that without effective

leadership these desired outcomes will never be achieved. A workforce must be

guided by leaders who are determined and willing to make improvements to an

organisation. Leaders with an innovative role must inspire innovation to adapt to

cultural organisational change. 'The word inspire is deliberate and important because

you cannot tell people to be more innovative, you have to inspire them to be so', as

mentioned by Stamm (2009:14). It seems that leadership is an essential requirement

for any organisation to innovate and capacity is judged on the ability to acquire

essential talent within the workforce.

It is therefore necessary for SMEs to effectively innovate they must ensure that there

is sufficient capacity, in particular the skilled labour force which must be inspired

culturally to change, with the provision of effective leadership, this can be achieved.

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Through this thought process SMEs can administer innovation effectively and ensure

that capacity does not override their desire to improve performance. More

particularly referred to in the answers to research question five.

2.3 Measuring Innovation

Measuring Innovation is fundamentally important in order to understand that the

business has met its objectives of creating opportunities and ascertain if a return on

investment has been achieved. This is essential to answer research question one

which asks how innovation can improve performance and sustainability.

Organisations that are innovative usually produce better quality products and

according to Simpson et al. (2006) ‘innovative firms focus on successful creation and

implementation of novel ideas, products, and services in the market place; as well as

having the ability to anticipate consumer needs, and responding to them better than

competitors.’ This is a good statement, however it does not take into consideration

whether organisations are willing to innovate by taking risks and have the necessary

capacity to innovate. Furthermore organisations are successful through innovation,

but without the correct leadership to channel this innovation into effect, organisations

will remain stagnant. According to Zhou (2003:413) ‘employee’s creativity often

provides a starting point for organisational innovation, but leadership is often

responsible for deciding what creative work is championed toward innovation.’

Therefore effective leadership is a driver and measurement of innovation as it

pushes an organisation to engage with the innovation.

New product development essentially improves the performance of an organisation

however Neely et al. (2001) states ‘with respect to outcomes of new product

development, past research has shown positive outcomes of product innovations

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relate to lower costs, existing product enhancements, extensions to product range,

better customer service, more rapid delivery, product customisation, and improved

after sales service.’ These performances suggest the range of measures to indicate

successful innovation.

Business performance and profitability is another measure of innovation success and

can be measured over three to five years in relation to return on investment,

turnover, market share, return assets, profits, sales, or relative sales growth, new

product sales as a percentage of total sales, new product sales, competitive position

and value to customers. This has been suggested by (Neely et al., 2001; Matunso

and Mentzer, 2000). However the performance of an organisation can also be

measured by positive consequences such as market advantages, involving

competition, customer related aspects and employee advantages, such as job

satisfaction and performance as suggested by Simpson et al. (2006). There are

different variations on how to measure innovation performance and it is necessary to

analyse them in order to ascertain how innovation can succeed within SMEs.

However it is a known fact that the process of innovation can conversely jeopardise

the performance of a business. It is important to realise that innovation is not only a

tool used to seek further opportunity, but it can also impose a burden on an

organisation. The risk factor indicates that before an organisation implements a

decision to innovate it must assess the risks. Negative consequences, such as

taking unnecessary risk can amount to unprofitable innovations leading to excessive

costs. To measure such risk According to Vargas-Hernández (2011:4) ‘it depends if

the innovation in general is more related to an incremental or radical dimension. A

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radical innovation has a high risk in comparison with an incremental which has a low

risk.’ Risk however it can also be argued is how the current market will react to such

an organisational change or new product, rather than if innovation is gradual or

incremental. If the R&D department has spent a long time developing a product and

the market reacts badly, it could either be the fault of the product or the demand for

it. If however the risk is so great, but it is able to penetrate the marketplace, then in

terms of measuring innovation it should be deemed a successful innovation

implementation. It is essential that organisations especially SMEs appreciate that

without taking a risk innovation will never work.

Measuring innovation is the ability within an organisation to understand how the

implications of it have affected the company’s progress. This is an essential element

of innovation in determining what SMEs want to achieve out of their innovation and

understand the desired consequences. This section overall endeavours to answer

research question one as it focuses on how SMEs use innovation to improve

performance and sustainability.

2.4 Total Quality Management (TQM)

Total quality management is an operational strategy that promotes members of an

organisation to utilise skills and experiences to generate continuous improvement. It

is a method of innovation which encompasses every opportunity and their greatest

attributes to ensure maximum potential productivity. It is suggested by Jabri

(2012:165) that 'the need for TQM remains high. Organisations constantly need to

improve quality as a result of increased globalisation and international accreditation

of quality standards.' It is therefore essential that organisations benefit from TQM to

ensure every opportunity is met. This is a method that if incorporated within SMEs,

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could ensure a greater competitive edge within the marketplace. However according

to Samaha (1996:145) 'TQM focuses on identifying work processes that need

revamping or replacing to finding new and more efficient ways of doing business and

in this way the TQM concept supports innovation.'

Total quality management as mentioned by Lorente et al. (1999) ‘has

demonstrated its potential to be a successful way for organisations to eliminate

costs, improve productivity and gain competitive edge in the marketplace.’ This is an

operational method, which can improve the performance of an organisation toward

gaining a greater competitive edge within the marketplace. Companies use TQM to

innovate their processes making their operations more effective. It can be argued

that TQM enables long-term sustainability through the continuous process of

innovation. However Yu-Yuan et al. (2010) otherwise acknowledges that 'TQM

promotes principles and practices that hinder innovation.' It is though, enough to

apply the principles of TQM to SMEs which will improve the rate of innovation within

an organisation. Again as suggested by Lorente et al (1999:14) 'companies following

a TQM approach can more easily assimilate innovations imported from other

situations due to the willingness of its employees to accept new ideas flowing from

the continuous improvement ethos promoted by TQM.' This can also become a

cultural issue regarding change within an organisation, but with regards to effective

leadership this problem can be resolved. It is however argued by Mertins et al.

(1997) that empowered employees taking part in the change process, are more

willing to get fully involved in making continuous improvement to the process for

which they have responsibility.' Having analysed that leadership is vital towards the

effects of TQM, it seems that there is a direct affect between innovation and the

parameters of effective organisational leadership. Perhaps this is a common goal

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that is, all SMEs are required to innovate thus improving business financial

performance. It again, however, depends upon capacity to introduce TQM within a

business and whether or not it can be incorporated within an SME because of

financial restrictions and the willingness to administer such a scheme.

This process will ascertain if innovation progresses within an organisation over a

period of time rather than adopting an entire business model change and to engage

new competitive markets. It is again critical that effective leadership is provided

within business innovation and it seems that there is a possible gap in the research

towards identifying leadership as a key principle to innovation. Overall TQM is a

business method an SME can use in innovation to seek new opportunities, which

they can develop to suit continuous progression. This method is essential to answer

research question two on how SMEs conduct innovation within their operations.

2.5 Business Process Re-engineering (BPR)

Business process re-engineering is another business strategy that aims to

completely reconfigure and change the direction of an organisation. This is another

operations strategy which attempts to answer research question two on encouraging

innovation. According to Ostadi et al. (2011) 'BPR aims to improve business

processes by substantially revising their structure and by dramatically changing how

these processes are managed and implemented.' However according to Hammer

and Champy (1993) (BPR) is defined as ‘the fundamental rethinking and radical

redesign of business processes to achieve dramatic improvements in critical

contemporary measures of performance, such as cost, quality and speed.’ This

process effectively changes the entire business, but it is a riskier solution to improve

business performance and can lead to dire consequences, as it is radical change,

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rather than seeking continuous sequential improvement. It is also suggested by

MacDonald and Dale (1999) that 'large step changes are riskier, more complex and

more expensive than continuous improvement.' Re-engineering and TQM share

some common similarities and it is suggested by MacDonald and Dale (1999) that

‘TQM and re-engineering are complementary and that TQM can often serve as the

building block for subsequent re-engineering efforts.’

Research question two asks how can these strategies be imposed on SMEs

to encourage innovation and would they be beneficial towards an organisation? The

main issue regarding TQM and BPR is that they use old strategies that were

beneficial to organisations within the 1980’s and 1990’s. It might be inappropriate for

these strategies are adopted now within SMEs due to the high level of risk. However

the use of Six Sigma might be a better approach for SMEs to adopt. Again it all falls

to available resources that SMEs can access and arguably its capacity to innovate.

Arguably, it may not therefore be appropriate for SMEs to incorporate (BPR) due to

the lack of resources and the amount of time wasted as it will interrupt the status of

the cash flow.

The purpose of business process re-engineering enables an organisation to

completely renovate the business and essential enabling organisational change. Due

to the age of this business instrument it may not be plausible for SMEs to undertake

such a venture, but should still be considered as an option for innovation to answer

research question two.

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2.6 Six Sigma

This is a relatively recent strategy for a business to adopt a step by step shift

towards innovation which again is targeted at answering research question two.

Although it does provide a similar structure to the previous management strategies

such as TQM and BPR that have just been mentioned. According to Schroeder et al.

(2006) ‘that although Six Sigma shares the same tools and techniques with

traditional quality management methods, it provides an organisational structure not

previously seen.’

The concept of Six Sigma is however usually adopted within larger

organisations but the qualities can be utilised effectively within SMEs to advance the

process of innovation. Six Sigma is another operations strategy which can

encourage innovation and answers research question two.

This operations theory which attempts to place new products and services into the

marketplace is defined by Antony (2008:420) and ‘seeks to identify and eliminate

defects, mistakes or failures in business processes or systems by focusing on those

process performance characteristics that are of critical importance to customers.’ It is

also suggested that Six Sigma is a driving force of business innovation and

according to Sauer (2001:10) ‘With a Six Sigma approach, researchers first find what

the customer wants and then look at the process capability study.’ This implies that

Six Sigma is an innovative tool that can lead to business performance and can be

utilised within SMEs.

However it can also be argued Six Sigma is only suitable for use within large

organisations, because of the greater amount of resources available to them

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compared to the limited budget of SMEs. According to Antony (2008:423) ‘Scale

should not really enter into a decision to adopt a Six Sigma management philosophy.

All companies, large and small share many common features and problems.’

There are problems using Six Sigma especially within small businesses as it

could potentially cause too many distractions, because employees have to engage

with multiple roles within the organisation. However according to Eng (2011:253)

‘Six Sigma provides methods to generate systematic innovation in a structured way

linked to market opportunities.’ The author Eng continues to acknowledge that it is

organisational learning that further improves the prospects of innovation. This in fact

leads to incremental innovation as Six Sigma continuously adapts to fulfil the needs

of customers, according to Santos-Vijande and Gonza´lez-Alvarez (2007).

Customers’ requirements consistently change and it is important for SMEs to adapt

and ensure they meet the right demand, so gradually implementing innovation,

rather than radically.

Six Sigma is therefore suitable for SMEs and is an innovating management

technique, especially eliminating waste according to Sony and Naik (2012) ‘Six

Sigma can also serve to eliminate waste of time and resources in the conception

process by linking it directly to customer wants and needs.’ It is important that SMEs

use Six Sigma in order to change their approach to new markets and customer

demands. However it depends on resources available to SMEs that justify the use of

Six Sigma, especially regarding expensive training budgets. Even if staff within

SMEs are trained with Black Belt Six Sigma for example, they may be inclined to

seek employment in larger organisations according to Antony (2008:422). Six Sigma

is an option empower SMEs in seeking new opportunities and assessing customer

demand through new products and services. This provides an answer to research

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question two on how SMEs conduct innovation within their operations.

2.7 Radical and Disruptive Innovation

Radical innovation imposes spontaneous innovation upon an organisation that either

involves the breakthrough of a new product or a new industry offering a service. It

involves entrepreneurial thought and identifying a gap in the marketplace, according

to Cooper (2000:1) ‘radical product innovation and disruptive or discontinuous

product innovation, creates a new dimension to the customers perspective.’ In other

words its objective is to entice the customer to purchase this new breakthrough or

inspire organisational change within the organisation. It however has some

implications to the organisation such as high risk and the effects upon the workforce

adapting to instant change. This is essential to answer research question three and

to understand if innovation can become a burden upon an organisation.

This is a type of innovation which according to Oke et al. (2007) are said to be

characterised by 'uncertainty, knowledge intensity and boundary crossing.' Radical

innovations are popular amongst SMEs as they generate high returns and it is

paradoxically easier for smaller firms to adjust their operations than large firms which

is mentioned by Kanter (1985:47). There is however a high risk and uncertainty with

using radical innovation and as mentioned by Chiesa et al. (2009) 'the main impact

of radicalness is related to an increase of uncertainty especially concentrated in the

early stages of the process.' Despite the risks involved in radical innovation it is

easier for SMEs to adapt to changes in organisational behaviour due to the nature

and size of the business as well as the lower costs of R&D.

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Radical innovation is a relevant process of innovation, which can assist SMEs

to become more competitive within the marketplace with the potential for generating

higher returns.

Disruptive innovation is a method according to Assink (2006:217), which 'attacks an

existing business, and offers greater opportunities for new profit growth.' It is an ideal

method for expanding the business. Christensen (1997:61) defines disruptive

innovation as a ‘product or service designed for a new set of customers.' However

the author, further states that improving the demand for a service or product does

not guarantee demand will rise and constitute market growth. In fact disruptive

innovation can create chaos within large successful organisations that have already

achieved growth within their R&D departments. The author Assink (2006:218)

reiterates that disruptive innovation is ‘affected by exogenous determinants such as

economic, social and political factors, competition and infrastructure, and

endogenous determinants such as resources, corporate structure and corporate

culture.’

The advantages of using disruptive innovation will ensure greater success with

achieving a competitive advantage, thinking outside of the box and gaining

knowledge to outwit main competitors. It is a useful tool for SMEs to take advantage

of new ideas that could potentially change the performance of their business. The

outcome could however backfire if the organisation is not ready to carry out the

innovation, which again depends upon having sufficient capacity to innovate.

With this type of innovation it is useful to understand the thought processes

within SMEs in formulating new ideas to generate profit. It is necessary for

businesses to expand their ideas for new opportunities, but depends upon whether

or not the idea produces a return on investment. However if an innovation is so

30

extraordinary that it has the potential to change the fabric of society, it is worth the

risk and implementation. This again answers research question three and outlines

how innovation is essential for SMEs and not a burden.

2.8 Incremental Innovation

Incremental innovation is the opposite of radical innovation as it imposes gradual

innovation over a period of time avoiding spontaneity. According to Tidd and Bessant

(2010:27) it is essentially ‘doing what we do but better.’ Which means that an

organisation continues its usual function, but seeks additional or alternative ways of

improving those procedures. In effect this type of innovation will gradually change

the culture of the company, as incremental innovation will accumulate progress over

time. It is therefore a less risky alternative for an SME to introduce innovation this

way as it in theory adapts and learns from previous precedent. This answers

research question three as it identifies ways in which SMEs can benefit from low risk

innovations and not disrupt its main functions.

This type of innovation seeks to improve a product or service with small minor

improvements to their usual function ability. It is defined by Hoonsopon (2009:56) as

'the development of products that have minor changes in attributes, and the benefits

from these changes are minimal from the customer’s perspective.' It allows an

organisation to make certain beneficial changes that will progress a competitive

advantage over time rather than radical instantaneous innovation.

However Storey and Easingwood (1998) argue that 'simple augmented service

offerings (or incremental service innovations) have the capability to impact a

31

company’s profitability and sales, but do not offer enhanced opportunities.' This is

suggesting it does not provide instant opportunities to organisations, but it is

however suitable for small organisations to use this method in order to initiate

innovative ideas with limited resources.

The advantage of the incremental method to SMEs is gradual innovation over time,

which allows the organisation to maintain control and clarity of business strategy. It is

different to radical innovation, which involves a different perspective and can create

uncertainty. According to Oke et al. (2007) 'Many of the innovation studies in large

firms revealed that management requirements for managing normal and existing

activities and developing incremental innovations are different from those required to

develop and manage radical innovations.'

The requirements for SMEs to manage incremental innovation is suitability

and its low risk element for those who desire to progress a little over time. It does not

encourage organisational change and could create boredom in the workplace, if

there is no active ambition for a business to succeed in the long run. It is a way of

avoiding organisational decline and market saturation as in theory the business

remains up to date with new markets and trends, as well as being open minded

about new sources of technology. This type of innovation is a suitable measure for

SMEs to adopt and encourage gradual change and growth and is useful to formulate

an answer to research question three.

Furthermore it is essential to understand how an organisation will use innovation, but

it must develop a process to push the organisation in a clear direction of innovation.

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2.9 Diffusion of Innovation

The process of innovation is an important aspect SMEs must adopt to implement

their ideas and goals and diffusion is the key to identify the influences and the

direction of adopting an innovation. With regards to the research question three the

purpose of diffusion allows an organisation to carefully implement innovation to avoid

disruption.

Diffusion of innovation is the 'process by which an innovation is communicated

through certain channels over time among the members of a social system'

according to Rogers (2003). It is the overall thinking process of adopting innovation

to improve the organisational abilities and growth. The process occurs in 5 steps

namely: knowledge, persuasion, decision, implementation and confirmation.

However according to Shanklin and Ryans (1984) the concept of ‘diffusion of

technological innovations is the basis for developing useful high tech market insights

for effectively researching those markets and for formulating consequent marketing

strategies that prove capable of proving company goals. ’Diffusion is not necessarily

about developing technological ideals, but it is about spreading the novelties of

innovations to changing societies as mentioned by Zenko and Mulej (2011) ‘all

novelties and or new solutions need to complete the process of spreading/diffusion

of potential users.’

Adopting an innovation depends on the interaction of the demand side and supply

side factors according to Tidd and Bessant (2010:352). It therefore depends on the

perceptions of the benefits and risks implementing the innovation as well as

assessing the relative barriers of adoption and availability of information. They also

33

continue to state that the factors which can influence adoption of diffusion fall on the

characteristics of the innovation itself; the characteristics of the individual and the

characteristics of the environment. This might suggest that it depends on the

character of the organisation and could potentially lead to an organisational culture

that for example is keen to take necessary risks. As mentioned by Zenko and Mulej

(2011) ‘innovators are mostly technically educated people and differ from most

potential users.’ Therefore innovation is subject to capacity and acquiring a highly

skilled workforce with the necessary skills to adopt innovations during diffusion.

Rogers (1962) reiterates that it is also the encouragement within organisations of

opinion leaders who frequently influence others orientations toward adopting an

innovation.

It is important to identify that certain variables will bring different innovative ideas to

an organisation and indeed the marketplace where these are derived from

organisational characteristics. According to MacVaugh and Schiavone (2010) ‘firms

launching product innovations should consider a broad range of variables in order to

maximise their adoption within market.’ It is possible that an organisation’s

characteristics have an impact on the process of innovation to configure the

complexities of initiating and implementing an idea. This involves the members of an

SME and fundamentally the organisation’s culture. It is essential SMEs have the

necessary characteristics, whether individual or environmental to ensure successful

implementation of innovation.

The application of diffusion if managed appropriately will ensure the successful

application of innovation during the operation of any new business venture or

34

strategy within SMEs. Provided certain measures are incorporated to analyse the

impact of a new product or idea within a certain environment. This again attempts to

answer research question three.

2.10 Summary

The purpose of this chapter is to answer the research questions and elaborate on

the relevant theories of business innovation. The main themes stated in the literature

review are that innovation has the ability to procure both profitability and

sustainability for SMEs. This can occur where an organisation has the capacity to do

so, especially if acquiring highly trained staff and ensuring effective leadership. It

should then be able to progress the innovation effectively, through either of the

operational strategies or using diffusion of innovation. An SME must then decide if it

would like to initiate the innovation incrementally or radically depending upon the

level of risk. This attempts to answer the research questions and form an analytical

viewpoint.

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3.0 Research Methodology and Methods

This chapter analyses research methodology, which is defined by Collins and

Hussey (2009) as ‘an approach to the process of research, encompassing a body of

methods.’ It outlines the purpose of the research, the strategy adopted, what

samples have been incorporated and analysed as well as the data collection

methods used.

3.1 Research Purpose

The research is delineated into three categories which embody the principles of the

purpose of the research. They are categorised as exploratory, descriptive and

explanatory, however each category has its own characteristic which can be

exploited to suit that piece of research. Collins and Hussey (2009) outlines the

description of each category as follows:

Exploratory research is conducted into a research problem when there are

very few or no earlier studies to draw information from.

Descriptive research is conducted to identify and obtain information on

characteristics of a particular problem or issue.

Explanatory research is a continuation of descriptive and aims to understand

phenomena by discovering and measuring casual relations among them.

The primary focus of this research is to understand the main drivers of innovation

and how they are incorporated into SMEs to improve performance. It is directed at

the research aim and questions, which focuses on the main drivers of innovation, the

capacity for SMEs to innovate, how innovation is measured, the main processes and

36

how they are conducted as well as identifying the barriers to innovation. Judging

from the comparison with the research aim and questions the focus of this research

is therefore exploratory. This is because the research seeks to identify patterns and

ideas of how SMEs use innovation within their establishments. The research also

aims at solving the problem of how SMEs can remain sustainable by utilising

innovation within their business strategy.

3.2 Research Approach

The research approach identifies which research paradigm, was used and whether

or not the study has been essentially qualitative or quantitative.

The purpose of this study was to understand the process of innovation within SMEs

using an interpretivist paradigm.

Interpretivism is defined as a paradigm that 'involves an inductive process with

a view to providing interpretive understanding of social phenomena within a

particular context' according to Collins and Hussey (2009). The research primarily

targeted local SMEs to discover how they have used innovation to improve their

businesses. It sought an effective response to answer the research questions.

Having identified that the research is based on an interpretive paradigm it was

essential to define qualitative and quantitative and how they were to be incorporated

into the research.

A qualitative research approach, is non-numerical data gathered in nominal form that

has not yet been quantified and the quantitative research approach is data obtained

in numerical form according to Collins and Hussey (2009). Qualitative research has

37

focused on the opinions of business leaders by interviewing managers or owners of

small medium enterprises, with the focus of collecting fact and opinion and

recognising particular themes or trends. As the research is focused on SMEs they

have been specifically targeted. However due to the nature of such companies very

few local business have been prepared to spare any time. The research has been

limited by the availability of people to be interviewed. Quantitative research has

been utilised to provide a greater proportion of professional opinion and clarification.

It was necessary to conduct this research to obtain broader data when conducting

the analysis.

For the purpose of fulfilling the aims and objectives of this particular research a

qualitative research approach has been followed. This research is not aimed at a

scientific perspective, but is focused on an interpretivist paradigm, which seeks to

provide an interpretative understanding of social phenomena. Both qualitative and

quantitative approaches have been included into the research as it is focused on the

opinions of others through structured interviews and online surveys. The research

has focused primarily on obtaining information of fact from interviews and statistical

analysis and utilising an online survey. These approaches are necessary, as they

provide greater richness to the analysis and attempt to answer the set research aim.

The data was gathered to analyse if the targeted local SMEs agree or disagree with

the research aim and questions. The data clarifies within the analysis that innovation

does indeed impact on the scope of performance in SMEs. The data collected is rich

and meaningful, by procuring the opinions of managers and business leaders,

bringing essential rigour to the analysis.

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3.3 Research Strategy

The strategy focuses on problem-based research, which according to Wisker

(2008:243) ‘all research involves the posing of problems or the positioning of ideas,

innovations or questions of some form or another.’ This identifies the problems many

small and medium sized enterprises have such as remaining sustainable and

remaining competitive. The research strategy considers how these businesses have

found solutions to their problems with the aid of innovation.

In order to focus on problem based research, it was useful to use some of the stages

and strategies of action research which, according to Gummesson (1991:102) 'action

science is primarily applicable to the understanding and planning of change in social

systems and thus is a suitable research and consulting strategy for business

organisations.' It has been vital to use qualitative research strategy to study

environmental change within an organisation, where it has adopted innovation to try

and solve an issue. Action research has allowed the identification of organisational

change brought about by innovation and has attempted to address the process of

that innovation, to reflect upon how it has improved the performance of the

organisation or hindered its business functions.

This research strategy was assessed to fit the parameters of the research aims

and questions. It focuses on how SMEs have utilised innovation to enter new

markets and remain competitive to avoid market saturation.

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3.4 Sample Selection

The sample of data that corresponds with the research aims involved semi-

structured interviews with local SMEs and online surveys to target business

professionals via social media. As the research was within an interpretivist

framework the sample sizes obtained have been small and are concerned with

generating theories.

Interviews were separated into three categories; structured interviews, semi-

structured interviews and unstructured interviews as mentioned by Wisker

(2008:194). Structured interviews involve the interviewee completing a set of multiple

choice questions, this does not however provide detailed information or the ability to

probe the interviewee for more information. Unstructured interviews are more in

depth and involve more of an open ended conversation, however the interview could

go off the point and would be very difficult to transcribe. For the benefit of the

research aim and questions, semi-structured interviews were used to maintain focus

within the interview as well as giving the interviewer the chance to be probed and

obtain more detailed facts.

Data has therefore been collected from a sample of semi-structured interviews,

which were conducted over the summer months, which have attempted to analyse

how various SMEs within the area of the South West and South Wales, use

innovation or dismiss it as a strategy. Interviews are according to Arksey and Knight

(1999) ‘concerned with exploring data on understandings, opinions, what people

remember doing, attitudes, feelings and the like, that people have in common.’ A

series of questions have been structured to ensure the collection of necessary

40

information, which will benefit the research analysis. Collection of information was

obtained by note taking and recorded dictation where possible to ensure the

information gathered was capable of being reproduced accurately. An online survey

was composed to target other professionals, to establish those who believed that

innovation was a necessary element in business performance or those who

disagreed. The number of interviews was limited because of the difficulty in

identifying companies who were interested in taking part in the research and who

could spare the time. This limitation may have affected the analysis, which is why an

online survey has been simultaneously conducted to broaden the amount of data.

Due to these difficulties and the limited timescale a maximum of five local SMEs

were targeted for interview, each lasting an hour. The information obtained has

benefitted the overall analysis by providing experiences and insights to innovation

and there beneficial use.

The research has also focused on the collection of online surveys, which were aimed

at a selected population to produce a greater richness of data for the analysis. The

purpose of the online surveys was to seek the opinions of individuals who are either

in business, are students, or have an interest within an industry. The information

from the data collected from the interviews has been re-enforced by the data

produced from the online survey providing a fuller analysis. It has been easier to

obtain information from individuals rather than from interviewees as the individuals

have been less concerned about confidentiality.

A survey is defined by Collins and Hussey (2009) as follows ‘a survey is a

methodology designed to collect primary and secondary data from a sample, with a

view to generalise the results of a population.’ The purpose of the online survey has

been to generate unbiased data from individuals who are independent of local

41

business and who have their own personal viewpoints. It is acceptable to use a

survey within an interpretivist study as again acknowledged by Collins and Hussey

(2009). The survey has been implemented within the social network service

“Linkedin”, which is aimed at seeking the opinions of professionals especially those

involved in business. It has also been targeted at business students to obtain a

broader collection of viable information of both individual facts and opinion. In order

for the data to be convincing twenty five samples were collected to achieve an in-

depth analysis.

Both sources of sampling have been designed for one to compliment the other, so

the benefits of both have been utilised to improve the scope and viability of data.

This has hopefully allowed the collection of a greater amount of data to ensure the

analysis is sufficiently rich with strong opinions and viewpoints. This data has also

been re-analysed with secondary research contained within the literature review,

which encompasses the use of strong academic journals and opinions of

professionals from current articles.

3.5 Data Collection Methods

The data collection has ensured all learning outcomes are met and are designed to

achieve an answer and understanding of the research aim and questions. This

collection has been the most effective method of achieving results within a qualitative

and quantitative research approach.

However, there have been a few limitations that could have jeopardised the

research outcome. These include the reliability of conducting interviews with local

businesses and choosing companies that do not have the sufficient capability to

42

conduct innovation within their businesses. The information received from

businesses has not always been sufficient enough to conduct a full investigation,

which has had consequences on the research. A further problem was receiving

biased data from businesses, which is another reason why an online survey was

conducted within the research. There was also an issue with conducting an online

survey as many professionals decided not to complete the survey. These limitations

have been reflected within the dissertation and have been analysed to ascertain if

they have had a significant impact on the overall assessment.

As previously stated the purpose of the study was to achieve the objectives of

the research aim that innovation is an important aspect of business performance

within the growth of SMEs.

Data collection has involved processing information from semi-structured interviews

and online surveys. A series of set questions has been prepared for the interviews

so a consistent approach is achieved. There were plenty of opportunities to further

probe each interviewee to gain more valuable information. This data has been

recorded (if allowed by the interviewee) by transcript and questions were asked in

accordance with the ethics form regulations. The focus was on the collection of

professional fact, opinion and trends from each local business. It was important to

identify opinions that did not support the literature, as this would establish any

important changes and alternatives. Overall the data gathered has attempted to

classify how many companies agree or disagree with innovation. It also attempted to

identify failed methods and new innovations that have improved the performance of

their business. Potential risks of obtaining poor data were, running out of time during

the interview or not acquiring relevant information, together with not securing

43

sufficient interviews. These risks limited the research, which is why as previously

stated an online survey was also used to act as a backup.

The survey was designed to concentrate on the research aim and questions that

formulate the purpose of the research and to ensure a broad overview of the

literature and the chosen topic of innovation. It was also designed to compensate for

potential problems encountered with the interviews as outlined above and was

intended to achieve a higher level of participation and more data to analyse. This

research was carried out satisfactorily within the timescale and available resources.

The survey itself comprised twenty five questions aimed at obtaining as much

information as possible on fact and opinion. The questions asked individuals to

agree or disagree and then to provide a brief narrative explaining their answers,

again with the purpose of producing more information to interpret within the analysis.

The potential problems were a poor response rate from the number of individuals

involved with the survey. The only solution to this problem was to make sure the

online survey was offered to as many individuals as possible to achieve a greater

success rate. However the answers from the interviews ensured enough data was

collected as well as from the online surveys. It was essential that sufficient

encouragement was made to individuals to produce a higher return of adequate data

responses.

3.6 Data Analysis

The analysis of the interview results, primarily focuses on identifying direct

correlations between each interviewee and ascertaining their views and opinions.

Various remarks have been placed into categories to identify certain trends and

44

behaviours that show organisations’ views on innovation. The data derived from the

interviews that had not agreed with the literature or the research aim and questions,

has been used to enable further analysis and draw conclusions as to whether or not

innovation is the correct course of action that SMEs should take. The main

implications of the data involved categorising emerging themes gleaned from the

responses of each interviewees. A generalisation has been made within the analysis

as a few responses from the interviews produced the same or similar trends of

opinions.

The analysis of the online survey results were aimed at collecting viewpoints of

individual opinions from professionals and people in business. The survey has been

created on the site “So Go Survey” which records every completed survey and when

finished can be uploaded on to a spreadsheet, to facilitate an analysis of the results

using various charts and tools. As this is only a small scale study, the data has been

concentrated on finding a relation between a few variables. The overall assessment

of the results is based on identifying trends and correlations which have helped to

conduct the analysis. However some of the information from the survey has

produced biased information and as said before, there was reluctance to complete

the questionnaire. The responses from the data have been categorised into relevant

themes and are analysed in accordance with the opinions of the individuals. The

analysis then attempted to ascertain what kinds of patterns of response, emerge and

what kind of themes emerge.

Both sets of results from the survey and the interviews are combined within the

analysis as they both seek to identify emerging themes. This collection of data and

analysis was designed to seek the opinions of leaders in small businesses and

formulating the opinions of other businessmen. A comparison has been provided to

45

discuss if the results from the survey fail to agree with the responses from the

interviews. A discussion has been implemented within the analysis to ascertain why

this occurred and form a critical analysis of the results.

From the initial findings the literature review will be used to analyse the themes in

more depth and draw a conclusion as to why these themes have occurred. If there

are no themes or correlations an argument as to why this had not occurred, will be

incorporated into the analysis. The empirical findings have been used to question the

validity of the literature review or vice versa the literature review questions the

significance of the findings. The comparison within the analysis has formed a

number of generalisations which answer many of the research questions. This

attempts to discuss if these findings could perhaps benefit small businesses or pose

a warning as to the risk and complications of innovation.

This research approach collectively embodies qualitative and quantitative data which

has strengthened the analysis. It also allows a greater body of data which has been

interpreted for themes and general patterns. The online survey asked more

questions as there was no chance of probing information unlike during the

interviews. Allowing both types of research approaches complimented weaknesses

from both. The approach not only pinpoints the opinions of SMEs, but also a general

opinion of individuals which removes any bias from the analysis. Overall this

research approach has collected a sufficient amount of data to further form an

evaluation and adequate answers to the research aim and questions. However the

weakness of the research approach was demonstrated by a lack of responses due to

the reluctance to complete the survey and also to arrange an interview.

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3.7 Quality Criteria and Ethical Consideration

To ensure that the research design was valid and reliable the utilisation of both the

online survey and the interviews was designed to complement each other’s

limitations. It was vital to target businesses under the categorisation of SMEs,

otherwise the results would have been invalid and not meet the parameters of the

research aim and questions. The online surveys were targeted at individuals who

work within organisations and have already developed business acumen. “Linkedin”

has provided access to this category of people who are engaged within the business

world. This has enabled the data to be reliable as it is targeting a specific sector of

people with similar ranges of knowledge.

There was an element of reluctance when completing the online survey as generally

people are inundated with consistent unsolicited requests, which would exclude a

large proportion of people from the data. This is known as non-response bias

according to Collins and Hussey (2009) ‘non-response bias is crucial in a survey

because your research design will be based on the fact that you are going to

generalise from the sample to the population.’ This means that if not all responses

are collected from the individuals targeted, the data will not represent the overall

population.

To avoid any errors or mistakes when collecting the research, it is paramount that

the questions submitted can be understood by individuals and maintain focus on

collecting essential data to fulfil the obligations of the research aim and questions. It

would be pointless to submit questions that would confuse the individual, making it

harder to justify their opinions and select the most appropriate answer.

47

During the interview process it was essential to maintain and establish a rapport with

the interviewee before commencement of the interview. A digital recorder was used

to collect the responses during the interviews, but permission was granted first by

the interviewee. Each question was structured to collect fact and opinion, it was not

designed in any circumstances to gather confidential or financial data from any

organisation, only to understand their thought process of innovation. Therefore

confidential and financial information was avoided as it does not in any event benefit

the finalised results of the research. An ethics form was prepared which outlines the

terms of the research conducted within the online surveys and the interviews. The

data collection was therefore fair and objective towards each individual and

businesses participated in undertaken the research and in no circumstances will data

be passed onto other bodies.

3.8 Summary

This chapter covered the process of the intended research methodology. To

conclude, the purpose of the research is to be exploratory because it seeks to

identify patterns and ideas of how SMEs use innovation within their establishments.

The research was so designed to utilise both qualitative and quantitative aspects of

research under an interpretivist paradigm. The research has been conducted

through the use of online surveys and face to face semi-structured interviews to

understand the views on innovation over as large a sample group a possible and its

use within a business. Both sources of sampling are designed for one to compensate

the other so the benefits of both are utilised to improve the scope and viability of

data. This will hopefully allow a greater amount of data to be collected to ensure the

analysis is sufficiently rich in strong opinions and viewpoints. The potential problems

48

with the survey could include a potential poor response rate from the number of

individuals and also during the interview the responses may stray from the purpose

of the research aim. The responses from the data have been categorised into

relevant themes and analysed using the opinions of the individuals. The analysis

attempted to ascertain what kinds of patterns of response are emerging and what

kind of themes are emerging. Overall, obtaining the research conformed to ethical

consideration and avoided compromising financial and confidential information as

previously stated.

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4.0 Data Presentation

The purpose of this chapter is to formulate the results achieved from the semi

structured interviews and online surveys used to collect quantitative and qualitative

data. The data will be provided in a logical order and will present the findings, to form

an evaluation on the role of innovation within SMEs.

These findings will attempt to answer the research aims and questions. The majority

of the results from the online surveys have been composed within tables and charts.

They can be viewed in the appendices to allow a full visual representation of the

research.

Every interview was conducted to understand the importance of innovation and how

it has been utilised. It seems that innovation is an essential part for SMEs to cultivate

ideas and generate growth and sustainability. Each company interviewed had

different agendas, but the principle factor is to develop new ways of obtaining

growth.

4.1 Online Survey Presentation

This part of the research was conducted to obtain the thoughts and opinions of those

individuals who are either involved within business or have studied the subject in

depth. The results suggest that a proportion of people within the set population have

sufficient knowledge to understand innovation and its importance within SMEs. The

survey was conducted online in order to reach the population. However a percentage

of the population was disinclined to participate, which may have consequences on

50

30%

32%

8%

15%

15%

Competitive Advantage

Improve Growth andPerformance

Product Development

Survival

Technological Change

the analysis. Despite the non-participation there is enough data to establish an

analysis and answer the research aims and questions. All the results have been

calculated accordingly and can be viewed in the appendices of this research project.

The results suggest that the majority of people believe the importance of innovation

is essential to any business whether small or large. Its importance is justified by the

participants who established that they agreed innovation is important for a business

to achieve growth. This confirms the parameters of the research aim and questions

that innovation is an important element towards business success.

4.1.1 Results

The participants were asked what the main drivers of innovation were and it seems

that 32% felt that achieving performance and growth and 30% felt that obtaining a

competitive advantage were the most beneficial factors of innovation (appendix 2).

This suggests that the research from the survey so far, corresponds with the

interpretation within the literature review and research question four. The majority of

51

20%

56%

12%

12%

0%

strongly agree = 20%

agree = 56%

unsure = 12%

disagree = 12%

strongly disagree =0%

the population agreed that capacity was an important factor in introducing an

innovation, however only a small percentage really thought it was a necessity

(appendix 3). This might be due to the fact capacity may only affect certain industries

that concentrate on introducing a new product to the marketplace and therefore

require a larger amount of capacity than others. This answers research question five.

The majority of candidates 64% agreed that innovation was worth the risk (appendix

4). However again only a small proportion 24% stated that they strongly agreed with

taking the risk. This might be due to the fact that certain participants in the research

are not all risk takers and do not have an entrepreneurial personality. It could also

point out that many innovations are risky and do often fail, but this is an essential

part of innovation process. This directly links to research question three.

0%

10%

20%

30%

40%

50%

60%

70%

strongly agree = 24% agree = 64% unsure = 12% disagree = 0% strongly disagree =0%

52

4%

0%

36%

52%

8%

strongly agree = 4%

agree = 0%

unsure = 36%

disagree = 52%

strongly agree = 8%

The next question asked candidates if having a flawless operations strategy is more

effective than implementing innovation, which 52% of participants disagreed with the

statement in total 52% (appendix 5). This suggests that innovation is an essential

element to any business and directly answers research question one. It is not just

about running the business and ensuring everything is optimised efficiently, but

ensuring new ideas are implemented to improve the performance of the business.

Improving performance is a recurring element in innovation and as suggested by the

next question on the survey it scored 40% of the total participants as a measurement

of innovation. This is due to the fact that an innovation will improve the return on

investment and stimulate new business procedures.

The majority of participants (72%) also agreed that implementing innovations

incrementally is more effective than any radical innovation, according to the 28%

who thought it was more favourable. The participants who thought incremental

innovation was more important have further stated that it is a less risky way of

innovating without imposing greater costs. They also stated that staff need to be

aware of the changes made by the innovations as otherwise they could possibly lose

clientele. They also thought that it was a more effective way to monitor and manage

53

the change effectively. Furthermore it was preferable that SMEs themselves

implement innovation incrementally as changes are more manageable and will

ensure greater sustainability and survival. Some participants thought radical

innovation was more beneficial, as they believed innovation should be carried out

with speed and decisiveness with the notion of failing quickly in order to carry out

more effective innovations through learning and acquiring knowledge. They also

pointed out that every opportunity should be harnessed when it arises to gain an

advantage the over competition. Organisations which are within a fast paced market

also need to innovate quickly in order to adapt and respond to these new market

changes. Overall innovation within SMEs must be carried out incrementally to

minimise risk ensuring consistent sustainability. This has attempted to answer

research questions one and three respectively.

The next question asked if having highly trained staff would further innovation within

organisations. The majority of participants 76% stated that they would and this was

because they believe that without the consistency of a skilled workforce, there will be

no generation or development of new ideas. They also speculated that the skilled

workforce can create innovation within the organisation and having acquired the

necessary technical expertise and pre-requisites to handling the necessary change

in the operation and promoting a transition. Skills are essential, such as behavioural

skills and hard technical skills. The majority of participants thought that knowledge

and experience amongst staff was an essential element to spur innovation within the

boundaries of an organisation.

The 24% of the participants who thought highly trained staff were not

important, and believed that in order to generate innovation, bring together people of

all skills into a comprehensive mix where unique ideas can surface. The people who

54

56%

40%

4%

0%

Strongly agree = 56%

Agree = 40%

Unsure = 4%

Disagree = 0%

Strongly disagree = 0%

generate innovation within an organisation must have a comprehensive outlook.

They also feel depending on the complexity of the innovation entailed, not all

innovations require highly skilled staff for an organisation to benefit. It is important to

therefore to have a firm mix of people with differing levels of skills and motivation, as

one participant stated even some highly skilled people are not always motivated.

The majority of participants 56% had strongly agreed that effective leadership was

an important factor to spur innovation as well as highly skilled staff as shown in the

pie chart below (appendix 7). This suggests that leadership is a vital factor in

implementing innovation and possibly an important factor within SMEs to push

innovative ideas into practice.

The next question focused on asking the participants whether or not innovation may

distract the organisation from completing its goals which also attempts to answer

research question three. Nearly every participant disagreed with this statement an

overall 60% as shown in the pie chart below (appendix 8). Most of the participants

felt that it is necessary for an organisation to innovate to achieve growth and should

55

0%0%

36%

60%

4%

Strongly agree = 0%

Agree = 0%

Unsure = 36%

Disagree = 60%


be administered with the business to compliment progress. They also stated that if

an organisation has no innovative goals, it will not be able to remain up to date with

technological advancements and the competition would have an advantage. It is also

a faster way to achieve an efficient and suitable outcome. An organisation cannot

advance if it does not have innovation, it must be at the heart of the business to

succeed, and it should not distract the organisation from its goals. Small companies

therefore must innovate to ensure their survival, otherwise the competition will

innovate and achieve a larger customer base at their expense. Another quote which

mentioned that as long as innovation is implemented gradually it will not distract the

main operational functions of the business.

The next few questions focused on ascertaining what the participants thought of

innovation within SMEs. The first question asked candidates whether or not

innovation is important within SMEs, to which the majority agreed that it was. 36% of

candidates strongly agreed with the statement and 56% agreed, which makes the

majority. Overall the participants suggested that innovation allows small to medium

56

sized enterprises to embrace change and build something new, which is critical to

sustainability and momentum. One suggested that with large corporations on the rise

small businesses need to find ways to survive. They need to keep up to date with

technology, marketing and other areas of business, making them stay afloat in a

world that is increasingly competitive. Competing with large corporations requires a

fresh approach and your customers need a reason to use your products. The

importance of innovation within SMEs assists them with remaining competitive and

also acts as motivation for staff to improve work experience. It is essential that

SMEs’ implement innovation because often they have to be more creative in how

they compete and the services they provide. If they cannot provide value by scale or

assurance by being long established as a market leader, often an SME will have to

offer something different. One of the participants also produced an example such as

‘Streetcar’ who implemented the use of innovative technology to give its members

the flexibility that other large car hire companies could not offer their customers.

However you could argue that the wheel turns slower with established SMEs but

start-up businesses are often destructive to competitive positions.

The next question ascertains whether or not participants thought that without

innovation SMEs would never grow and remain sustainable. 40 % of participants

agreed that this was the case, however certain participants argued that it also wasn’t

as shown below (appendix 10).

57

12%

40%

20%

20%

8%Strongly agree = 12%

Agree = 40%

Unsure = 20%

Disagree = 20%


The number of participants who provided answers, agreed with the statement, which

suggests that it is important for small businesses to continuously innovate to remain

competitive. However others maintained that small businesses can find alternative

ways to become competitive, such as to re-locate to a low cost economy, create

world class organisations to drive better efficiency. That also SMEs can survive by

simply providing a good, reliable service and maintaining consistent reputation. If a

business has a core offering and works hard to establish a good reputation and

deliver at a sustainable price, they can have a long and successful lifespan.

Furthermore apart from the participants who disagreed with the statement that

innovation seems to be a necessity for organisational change, believing that even

without innovation, someone will eventually produce a breakthrough product

resulting in a greater market share. There would be no reason for the organisation to

grow or remain dynamic against its competitors who may be more innovative.

The next question set asked participants more specifically, if they thought that

innovation would ultimately improve the performance of SMEs, which every

participant said it would and that it is also worth the risk. This may be due to the

previous questions being aimed at identifying how innovation can be utilised within

an organisation, this asks candidates specifically whether or not would benefit SMEs.

58

The participants were then asked what management techniques could be used to

stir the process of innovation, which also answers research question two. The figures

suggest below (appendix 11) that all participants favoured Total Quality Management

at 40% and that most of the participants were aware of these practices. The least

preferred method was Six Sigma at 16%.

The final question of the online survey and also research question two asked

candidate’s if these management principles could be of use within SMEs. A majority

(76%) stated that they could, but only if the organisation has sufficient resources and

timescale. However many outlined that these methods can inspire innovation, but

they are not enough on their own. Incorporating innovation needs an entirely

different way of thinking and all of the methods are designed to achieve gradual

improvement of existing systems. Total Quality Management was the most popular

technique, which according to the participant’s enables businesses to provide a

strong performance model with a mark of excellence. The quality mark demonstrates

the use of strong business management and willingness to innovate and change.

They also suggest that TQM is important in every business, those producing and

those initiating are equally as important in the success of the product. Six sigma was

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Total Quality Management Business Process Re-engineering

Six Sigma Lean Operations

59

thought to benefit an organisation by identifying strengths and weaknesses within a

company which may benefit the process of innovation.

Overall as suggested these techniques the light use of any of the above principles is

an excellent platform for designing the right interventions. The corporate tendency to

build self-perpetuating industries around such methods delivers too much distraction,

cost and overhead for SMEs. The people who lead SMEs are mostly unimpressed

by the technical or intellectual merits of prescriptive methodologies. However as

stated by one particular research candidate, all of them are relevant in encouraging

individuals and companies’ to think about the challenges they face and quantify

them. These management principles can be administered and even the smallest of

companies can benefit from the processes as long as they don’t hinder daily

operations. Processes can focus individuals and the organisation as a whole, and if

in place, can make growth a lot easier.

4.1.2 Summary

The survey obtained the opinions of individuals, of professional people and those

who work in the world of business. The data collected ascertains that innovation is a

concept that most people understand and that it is a genuine business function that

can be applied within small to medium sized enterprises to improve performance.

The next section of the chapter will form a critical analysis of the results and will use

the contents of the literature review to form an evaluation and comment on the

patterns and trends that have been presented so far. The presentation of the

individual semi -structured interviews will be presented before an analysis is

conducted.

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4.2 Semi-Structured Interviews Presentation

The purpose of the semi-structured interviews was to enter an SME and specifically

ask questions about that particular organisation and their thoughts on innovation. A

total of four organisations were interviewed (a fifth withdrew) and were asked

whether or not they had considered innovation. The companies picked are all from

different industries which utilise innovation in their own way and sometimes not at all.

Each company was different in character to remove any bias from the research.

Each interview began with a number of set questions designed to fulfil the

research aim and questions. As previously explained in chapter three the questions

were designed to maintain consistency within the interview and to also probe the

interviewee for more information on previous innovations. The interview questions

can be viewed within (appendix 12).

The questions were focused on obtaining as much detailed information on innovation

within that particular company to answer the research questions. After the last

question the interviewee was probed for more information regarding the importance

of leadership within innovation.

The first question asked companies what their main drivers of innovation were, which

attempts to answer research question four. Most stated profitability was most of all

important as well as ensuring long term sustainability. This was also backed up with

the view of seeking a competitive advantage within the marketplace and taking in

different types of work to ensure greater profitability. Diversification was mentioned

by a few companies who thought that it was an important feature of innovation. One

of the companies in particular, stated that their main driver to innovate was

61

identifying a gap in the marketplace and finding a new market which would

guarantee the company profitability from their services. A change in the economy

had led a few businesses to re-think their strategies and adapt to the new

challenges, by using innovation to seek other forms of income. Overall this attempts

to answer research question four, where it seems that profitability and sustainability

are the main drivers of innovation.

The next question asked what innovation meant to their company and the majority

stated that creating new opportunities was the purpose of innovation. This attempts

to answer research question one on improving performance and sustainability within

an SME. Apparently it is a vital factor to introduce something new to the

organisation. However it is difficult to implement change especially when members of

staff are not accustomed to change. It is also difficult to initiate due to the wide

variety of competition. Most companies stated that innovation is essential to do

things better and know more than the customer. Maintaining a consistent reputation

and seeking to promote the company through that reputation by not being

complacent.

The following question asked the participants if their companies had the necessary

capabilities and capacity to adopt innovation. This was an attempt to answer

research question five on why capacity is required to innovate. Most of the

companies suggested that staff are an essential element needed to implement and

carry out organisational innovations. A few of the companies rely solely on labour

and maintain that staff with interchangeable skills are necessary to carry out the

implications of innovation. One company stated that staff innovate with the right mind

set and skills to identify and manage opportunities. Staff manage technical tools

such as IT, which are updated continuously to innovate and to give the company an

62

edge. It is therefore not only about highly skilled staff, but also the technical

resources, which maintain consistent innovation. Skills, knowledge and the right

tools enable the company to become really efficient. This also answers what is

required to develop innovation and make it work for an organisation within research

question five.

Another company has taken the advantage of the decline in jobs available for

graduates and employs those who struggle to acquire jobs. It utilises them to

improve the prospects of innovation using in house intelligence work to provide them

with work experience and skills for their input. Arguably this is innovation itself.

The next question asks how each company measures innovation where most

responses were measured by business success and profitability. For some however

they felt it was too early to tell about the recent innovations they had implemented.

Usually some of the companies mentioned the fact that they had expanded their

business infrastructure as well as introducing new customers. Measuring innovation

can be identified as organisational growth where the organisation itself has identified

new opportunities and acquired new customers.

Each company was then asked how their company had been innovative in the past.

A few of the organisations identified gaps in the market and have succeeded in

providing businesses with cost cutting effective energy solutions. This was asked of

interviewees as it demonstrates how they have used innovation, which again

answers research question one. This is an example of how using innovation can

identify opportunities. Another company interviewed, also identified a gap in the

market from the demand of the company to provide another service. A new company

was then set up from the original organisation, which opened up new avenues of

63

contracts, new market orientation and more scope to the organisation. Therefore

using innovation within SMEs when adopted correctly can provide new business

ventures and essentially transform these new opportunities into profit.

Another business stated that hiring new staff who are better trained and exploring

different avenues of work, has ensured the business remains sustainable. This data

ascertains that innovation within SMEs is an essential core competence to ensure

sustainability and survival. It is not just about maintaining organisational

management effectively but seeking opportunities and adopting changes

accordingly.

The results of these previous innovations for each organisation have seen the

benefit of extended growth and increased profitability because of new opportunities

and implementing each innovation. Not only has it added to the viability, but also

improved the reputation of each company, ensuring a continuous demand from

existing customers as well as finding new customers by word of mouth. This

hopefully ensures the long term sustainability of each company as guaranteed or

possible. However it is only possible if each organisation remains consistent in its

desire and innovate and maintain or enhance sustainability. These responses have

therefore answered research question one.

The next question asked if each organisation considered using management

techniques such as TQM, Six Sigma and BPR. The organisations who had not heard

of these concepts were provided with an explanation by the interviewer. This

question was asked to answer research question two. A few agreed that adopting

these principles would not only encourage performance but recognise new

opportunities. These organisations also stated that they have a poor management

64

structure and that utilising these techniques might be beneficial to improve innovative

thinking.

Most of the organisations interviewed agreed that utilising TQM would be beneficial

to enhance growth and seek new opportunities that the organisation had not

anticipated in the past. The other organisations interviewed stated that they had

applied their own internal processes and procedures that were effective in improving

organisational performance. The use of brainstorming sessions with staff members

encourages a wider scope of innovative thinking as well as applying a regular SWOT

analysis. Other organisations rely solely on the director, due to the size of the

company, which comprises an assessment of work and arranging the necessary

logistics to perform a job at hand. It is argued some SMEs do not have the essential

capacity to innovate due to other management priorities, such as carry out the core

competences of the organisation. This response has therefore answered research

question two.

The next question asked whether the organisation initiated innovation gradually or

instantaneously and attempts to answer research question three. The majority of

participants declared that gradual innovation was the most appropriate method to

use. It was suggested that radical innovation would disrupt the core competencies

and could be self-destructive leaving a detrimental effect on the operation. Another

business stated that because it is a solicitors practice it operates in a traditional

manner with low risk aversion. The company deals with people who expect their

affairs to be dealt with in a traditional manner and value trust.

However one company in particular is reliant on technology where I.T evolves in a

continuous process and it is vital to improve technological instruments to meet the

65

demands of clients. There was also no hesitation to act quickly as some innovations

require a spur of the moment thought, especially where technology has to be

changed quickly. It is also important to change quickly due to external factors such

as a change in government legislation that sometimes require an immediate

response to meet these pressures. The same applies in improving a product

facilitating diversification and could potentially increase income. Overall the results

suggest that innovation within SMEs is effective on a step by step basis, producing a

lower amount of risk and an easier way of adapting to change effectively. The results

have therefore attempted to answer research question three.

The last question asks whether the company would consider innovative ideas from

members of staff in their particular workforce. This question was asked to attempt to

again answer research question five to understand what is required to innovate. The

majority of organisations agreed that they would consider innovation from members

of staff, because they know the business internally and are aware of the company’s

potential to improve. One company suggested that the workforce can provide a

source of feedback to generate ideas and collate information that could have the

potential to improve performance. Listening to other people’s ideas is essential to

promote ideas and encourage staff to participate in the overall operation of the

organisation. However one of the companies stated that they would listen to staff,

but would not necessarily implement their ideas without proper assessment to avoid

creating problems with existing production which would be counterproductive.

However it is not just about listening to staff, but also incorporating effective

leadership. This is essential to inspire innovation as well as maintaining company

culture. Members of staff are encouraged to earn respect and to know where

responsibility rests, this ultimately builds mutual trust and confidence. Company

66

culture may provide the workforce with confidence to implement projects that involve

key decisions and accuracy. Any negativity within the organisation needs to be

challenged by the key directors and effectively resolved quickly to ensure maximum

performance. Leadership is therefore a vital component of innovation to encourage

staff and contribute to the success of any organisation. It is also of paramount

importance that staff are encouraged to participate within the organisation not only to

improve job satisfaction, but to also generate ideas that may have the potential for

future innovations and preserve jobs. This has not only answered research question

five but identified a gap where leadership is an important function to innovate.

Another key factor to innovation within SMEs according to one of the directors was

failure. Without implementing new ideas and perhaps failing, an organisation will

never grow and perform at its highest potential.

67

5.0 Analysis

This chapter will attempt to analyse all the qualitative and quantitative data obtained

from the research, as well as incorporating the contents of the literature review to

meet the research aim and questions. The intention of this chapter is to perform a

critical evaluation of all the findings and the literature review in order to carry out an

analysis.

The research has ascertained that innovation is an important process to any

organisation, which wants to improve performance and sustainability. The literature

also states that generally small firms innovate to increase their chances of survival

and growth. The general assumption from the research undertaken and the

description within the literature review, suggests that innovation is a fundamental key

business principle that ensures success answering research question one.

The general pattern from the research suggests that innovation within SMEs is

important. The majority of the companies that were interviewed agreed it was a

fundamental process to provide opportunities that bring business success. A

statement was made by a participant who agreed innovation was necessary within

SMEs and pointed out that ‘with the rise of corporate companies a small business

needs to find ways to survive.’ This suggests that innovation is not only a source of

profitability, but a way of allowing greater success to withstand the pressures of

larger corporations. It can be argued that organisations that perform effectively are

not required to innovate. Although according to the literature review organisations

that do innovate produce better quality products and services, which suggests that

innovative companies focus on value.

68

The main drivers of innovation according to the majority of the data providers,

suggest they are seeking a competitive advantage and achieving growth and

performance therefore answering research question four. This is however a

generalisation of a mix of different industries which may not rely on technology to

produce more sales. Businesses that rely solely on technology to meet the needs of

clients are in considerable demand and need to ensure it is up to date and so that

they can achieve its main functions. Technology is an important business function

but as this research is concerned with focusing on SMEs, it may not be essential due

to the high cost of R&D which large organisations can access. Although one of the

companies that was interviewed speculated that technological innovation was of

paramount importance to not only meet the needs of clients but to encourage new

demand for future long term growth. It seems that technology in itself acts as a driver

to ensure growth and improved organisational performance. Small businesses need

to keep ahead of technological advancements, otherwise competitors will use it as

an advantage. This also falls under product development improving current assets

which may improve competitive advantage in itself, thus achieving growth. This is a

driver of innovation, but it depends on the particular industry and if there is no

demand for a product there is no need to develop it further. An organisation would

not waste time or money, but use innovation to explore new avenues of growth.

Product development should not be dismissed entirely, as according to the literature

review if a new market can be achieved through a particular product, the company

would undoubtedly achieve a significant amount of growth.

However according to the details within the literature review, companies that

innovate within a competitive environment have a greater chance of success. This

69

research is further substantiated by the majority of participants who completed the

online survey that competitive advantage is an essential driver to innovation. This

however suggests that those SMEs which are not within a competitive environment,

will succeed as it can be argued that growth is a major driver. As mentioned within

the literature review, small companies are more concerned with staying viable for as

long as possible.

Fundamentally the research suggests that the main driver for innovation within SMEs

is to improve performance and to achieve growth. It is how they remain sustainable

and achieve, but as the analysis suggests it depends on the type of industry, as

mentioned beforehand. SMEs are encouraged to adopt innovation to improve their

performances and long term growth that would then improve sustainability. The

research has attempted at question four the main drivers of innovation within SMEs

and critical analysis performance, growth is the main driver. It seems the general

assumption from most people is that innovation does improve performance and

growth and that is why the majority of participants in the research agreed that this

was the case. It is however important for SMEs to keep ahead of technological

advancements as much as possible to remain competitive and ensure survival.

This assumption from the research also demonstrated how a company would

measure innovation. Again it is shown from all the research that it improved

performance. The results from the interviews tend to suggest otherwise and that it is

instead profitability that counts. The major differences in the results suggest that the

participants who were interviewed are the primary directors and state profitability is

the only measure of innovation, answering research question one. Whereas the

participants within the survey may understand that innovation is only measured by

performance and not profit. The two different results seem to suggest differences of

70

opinion from business leaders as they have the belief that profitability is a

measurement of success itself. The details within the literature however state that it

produces a return on investment, as well as achieving positive consequences such

as suggested by Simpson et al. (2006), which are competition and customer related

aspects and more precisely, reputation.

An organisation can adopt innovation to achieve performance and growth, but must

ensure it has the necessary capacity to do so. This is especially important to analyse

within SMEs because of their smaller infrastructure as larger organisations can

initiate innovation within any environment. The research suggests that capacity is

important although it was argued by the participants of the online survey that it

depends on the size of the organisation as all SMEs vary. The literature review

states otherwise, that innovation can only occur if the capacity to innovate exists.

Capacity was related to obtaining highly skilled trained members of staff who have

the ability to generate innovative ideas. It is not necessarily the case for many SMEs

as they simply do not have the finances to employ such qualified individuals plus it

also depends of the complexity of the innovation. It is not necessarily about highly

skilled members of staff as according to the literature review it is more about having

staff members who are adaptable to change. This was also discussed at an interview

that leadership is vital to ensure the strength of company culture is not diminished by

change and that staff are prepared to embrace such change. The contents of the

literature review also states that leadership is important within innovation to adopt

cultural organisational change. This has answered research question five on

innovation capacity.

Essentially it depends on the circumstances of the change and the way the

organisation imposes innovation. If the process of innovation is gradual, it will ensure

71

a steady pace of change and will mitigate against the detrimental effect of

organisational change. Radical innovation will impose spontaneous change and

could affect company culture dramatically. It is also suggested that incremental

innovation is highly successful within SMEs as it lowers risk, but the impact of radical

innovation cannot be ignored as spontaneous ideas often enhance company growth.

An organisation should perhaps carefully prepare for adopting radical innovation, if

decided upon to prevent the sudden changes of external environmental factors from

affecting company culture. This has answered research question three asking if

innovation places a burden on organisations.

Leadership is essential within SMEs to push innovation to members of staff and

enable the stability of company culture. That is why capacity is an important factor in

ensuring the process of innovation is not affected. This relates to research question

five that capacity to innovate is important for performance and growth. The main

similarity between the research results and the literature review, was that the

provision of good leadership and highly skilled staff is an essential element within an

organisations capacity.

Innovation is a process that involves preparation and organisational ability to ensure

ideas are implemented and needs time management. The use of diffusion allows the

organisation to progress innovation correctly and according to Rogers (2003) it

requires a number of steps to be undertaken. SMEs might struggle to adopt

innovation potentially hindering the performance of its core competences due to the

number of potential risks. Diffusion as well can only be justified if the demand for a

service or a product exists. The results suggest that innovation would not hinder the

performance of a company, in fact a number of participants suggested that a

company could never achieve its goals if it does not innovate. It is also about having

72

the ability to stay ahead of the competition. SMEs can be reluctant to innovate, but

utilising the process of diffusion will reduce risk and allow the company to focus on

its primary objective. However the use of diffusion of innovation within an SME

depends on organisational culture and the will to utilise it. It depends entirely on the

culture of the organisation to initiate any idea effectively. It therefore falls on the

organisation to decide if it wants to take steps to become sustainable or continue

with its existing core business that may lead to decline. This attempts to answer

research question three that innovation itself might impose a hindrance to SMEs.

This depends entirely upon the characteristics of the organisation especially culture

and leadership which are the defining elements needed to implement innovation

using diffusion. Innovation, therefore according to the analysis must be initiated

correctly within an organisation to avoid hindering performance.

Having analysed the process of innovation it is important to understand what SMEs

can use to promote the process of innovation within their management structures. In

the literature there are three management techniques, which are deemed to have

innovative abilities. TQM for example encompasses utilising every resource and

opportunity to ensure maximum performance potential. This part of the research

ascertains whether these management principles could be applied to SMEs to

encourage innovation. TQM was considered more beneficial to SMEs rather than

BPR and Six Sigma. According to the results one participant stated that ‘total quality

management enables business to provide a strong performance model with a mark

of excellence.’ This also places a similarity with the literature review that TQM

imposes, improving the performance of an organisation toward gaining a greater

competitive edge. However TQM as well as BPR is an old business model, which

may not incorporate newer business management alternatives. During one interview

73

it was discovered that the company had used BPR, but never realised when they

completely changed the entire organisation from staff to organisational functions.

As suggested by one of the companies interviewed they agreed that TQM was the

best way to achieve greater performance, but they themselves incorporate their own

management practices with internal processes and procedures. They also use a

number of brainstorming sessions with members of staff, as well as a SWOT

analysis. This may prove that the management techniques can be used, as

according to participants in the survey ‘all of them are relevant in encouraging

individuals and companies to think about the challenges they face and quantifying

them.’ Another participant however states that the processes are not essential to use

within SMEs. According to the research “people who lead SMEs are mostly

unimpressed by the technical or intellectual merits of prescriptive methodologies,

they sense and judge on outcome and pace.”

Overall it may seem favourable for some SMEs to utilise these management

principles as they do encourage organisations to improve performance and seek

alternative opportunities. It is worth mentioning that these management techniques

were mostly effective during their first adoption within the 1980’s and 1990’s. Due to

significant rise of new markets and technological advancement, it may be better to

seek alternative techniques. The research suggests that developing internal

organisational measures are more effective and encourage innovation. This is

especially significant within a number of SMEs, who may not have knowledge of

such techniques. The significance of these techniques, if implemented correctly, may

benefit SMEs. There is a similarity between the literature review and the research

that using the techniques may make achieving growth, for SMEs a lot easier, but

only as long as they do not cause a hindrance. The problem with their use requires

74

new knowledge and adapting organisational culture, but in terms of innovation it can

develop alternative ways of running an organisation and discovering new

opportunities, which will ultimately improve the performance of an SME. This

answers research question two, as to whether or not these management principles

can be applied to SMEs to encourage innovation. It is however only an option which

SMEs can choose as they may decide to adopt their own management techniques.

This chapter has presented the findings of the research undertaken to answer the

research aim and questions as mentioned in chapter one. The research and

literature review have been used to analyse the impact of innovation within SMEs.

75

6.0 Conclusion

This final chapter will conclude the research aim and questions, outline the

contributions and limitation of the research, draw conclusions and offer

recommendations for future research.

6.1 Answer to Research Aim

Chapter one highlighted the research aim of this study, which was to ascertain

whether SMEs understand that initiating an effective operations strategy is not

sufficient enough to respond to competitive threats and change. The organisation

must be capable of innovating new products and services to meet changing

demands and other competitive threats. The purpose of this research aim attempts

to understand how SMEs use and develop innovation and its effects on

sustainability. The research undertaken has acknowledged that innovation is a

fundamental principle for SMEs to adopt in order to retain long-term sustainability. It

has also answered the research questions, which are briefly mentioned below:

How does innovation improve performance and sustainability within SMEs?

The research targeted local SMEs and identified that using innovation within their

organisations improved profitability as it developed new business ventures and

produced consistent improvement over time. This enabled companies to remain

sustainable and improved the functions of organisations whilst maintaining a strong

competitive presence.

76

How do SMEs conduct innovation within their operations, and does the use of

Total Quality Management, Six Sigma and Business Process re-engineering

encourage innovation?

The research suggested that these operational techniques could spur the process of

innovation within any enterprise. These processes are designed for improving

performance, administering change for the better and adopting new products and

services. The study found that most SMEs would benefit from the principles. It was

discovered that few SMEs, of those interviewed, successfully interpreted their own

principles. Most businesses were compelled to utilise TQM out of the three as this

technique is designed to encourage maximum organisational performance and

opportunities.

Does innovation place a burden on SMEs which will ultimately distract the

organisation from its core competences and hinder its performance?

According to the study innovation is not a hindrance to SMEs; it is an essential

element to achieve sustainability. It depends however on culture and characteristics,

which involve an organisation’s own interpretation on how to innovate effectively. If

these companies adopted diffusion of innovation it would allow them to continue their

primary functions and ensure innovation is implemented correctly.

What are the main drivers of innovation and why should SMEs explore

innovation?

The research suggests the main drivers for SMEs to innovate is the ability to improve

performance incrementally and seek to achieve a competitive advantage. For the

benefit of SMEs this ensures long-term sustainability and growth.

77

Does an SME require sufficient capacity to enable an organisation to

innovate? What is required to develop innovation and make it work for an

organisation?

Capacity is a fundamental component of innovation within SMEs that acknowledges

elements of skilled members of staff and leadership. These are necessary to push

innovation within an organisation and to ensure organisational culture is not affected

by change.

6.2 Overall Conclusion

This research has discovered in detail how small businesses use innovation within

the modern business world. The study involved exploring small businesses within the

South West and South Wales to understand if they used innovation and if they did

not, their reasons for not doing so. It also went on to understand the perspectives of

individual business members themselves on their opinions of innovation in SMEs.

This was then analysed with the use of academic theory contained within the

literature review, to further enhance and evaluate the importance of innovation.

The study has proved that a business must attempt to evolve; it is especially vital

when considering the growth of competition. It also ensures the success of a

business by encouraging new ideas and alternative ways of business procedure.

The research has given an insight into the pressures and hostilities SMEs face within

a modern business world, where small businesses struggle to remain sustainable. It

has also benefitted from an understanding of the resources required to innovate and

how organisations decide to innovate be it gradually or spontaneously. The most

78

important factor that the study has ascertained is the ever growing importance of a

positive organisational culture and leadership, which according to the research are

important in not only initiating and driving innovation, but to the sustainability of the

company itself.

With regards to the limitations of the study, there were a few problems that

might have affected the analysis. The first was a reluctance to commence or finish

the online survey; a large number of people attempted the survey but only a few

actually finished. This would have reduced the population sample and might have

potentially caused the results to become biased due to the circumstances. However

there was enough data to process and use within the analysis to form an evaluation.

Many of the participants were very descriptive in their answers, which allowed a

greater richness of the evaluation. Another problem was the difficulty in convincing

local small businesses to agree to be interviewed. This was due to the fact these

particular organisations were too busy and felt it was not worth wasting their time.

However four interviews were conducted from different industries where each lasted

just over an hour. Enough data was collected, being sufficient to conduct a full

analysis especially including the responses from the online surveys. Both types of

data collection were believed to be successful in discovering characteristics and

trends. It proved possible to find individuals and organisations that had previously

used innovation successfully.

In an ideal world, if the work were to be repeated, more time might need to be

allocated, to obtain more data from other organisations. This might have produced a

greater amount of data and acted as insurance against an interview being cancelled

due to unforeseen circumstances as one interview was. A focus group could also be

79

arranged composed of leaders of local businesses to obtain a similar and broader

range of results, although this could prove too ambitious.

6.3 Contributions

This research has contributed to a number of factors, which have pinpointed that

innovation is an essential element to a business achieving additional success,

alongside its current operations. It ascertained the fundamental principles of the

process of innovation and highlighted that leadership and a strong organisational

culture are vitally important towards implementing innovation and enhancing

performance. In respect of the research filling gaps, it has demonstrated that

leadership is an important part of innovation and without it an organisation will

struggle to engage in implementing innovation. It is also an important factor for

skilled members of staff to remain continuously innovative and are able to make

suggestions and ideas that might benefit an organisation from within.

6.4 Limitations and Future Research

The only limitations to the research were the reluctant participants who were asked

to complete the online surveys, which restricted the amount of data from the

population sample. Combined with the reluctance of a few small companies to

undertake an interview due to time pressures and the last minute cancellation. This

reduced the amount of data that could have been included, which would perhaps

have set a stronger analysis. There was also a limitation with the fact that a couple of

online participants had never heard of innovation, which not unnaturally affected their

80

answers. There was also limited business knowledge in one of the interviews, which

was due to the business proprietor specialising in a particular industry, with few staff.

Having discussed the limitations this piece of research has the potential to be

followed up in a wider scale. It would be beneficial for the research to identify and

interview businesses on a national scale to demonstrate, how innovation has

impacted on business performance and growth. It will also highlight which SMEs

have continuously remained sustainable throughout many sectors and different

industries.

6.5 Recommendations

In particular a few of the sample companies do use innovation in their own way and

continue to thrive through their ingenuity and perseverance. One of the organisations

was a law firm, which is attempting to expand and achieve new forms of growth.

Innovation would be beneficial towards this organisation as it must explore new

areas of legal practice to survive. Currently the firm specialises in property

transactions, family law and probate, all areas are threatened by new competition .It

would benefit the firm to specialise in other areas of law that would potentially bring

new clientele, perhaps even establishing non legal work. It is essential for any law

firm to improve and update especially when legislation and case law changes every

year. Another company, which offers holiday breaks on narrow boats needs to

innovate further to create new avenues of business, as the UK holiday industry is in

decline due to customer whims and market saturation. It might benefit both these

companies to develop their ideas incrementally and examine the process of

diffusion.

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6.6 Chapter Summary

The purpose of this chapter is to conclude the research project. It has answered the

research aim and questions and further explained the significance of the analysis.

Innovation is a key fundamental tool for SMEs to remain sustainable and encourage

improved performance. The gaps that have been filled within the research are

identified as organisational culture and leadership, which are essential to encourage

effective innovation. There are limitations in the amount of research arising from

reluctance of people to actually participate, although they had offered to participate

with the data collection. The analysis has however proved that innovation can be

carried out within SMEs through different management techniques and will not cause

disruption to the core business. This piece of research can also be used to illustrate

the behaviour of SMEs and their use of innovation to improve performance and

profitability.

82

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8.0 Appendices

8.1 Appendix 1

Questions

1. Do you agree that innovation is important for a business to

achieve growth?

A. Competitive Advantage B.

Improve Growth and

Performance C. Product

Development D. Survival E.


2. What are the main drivers of innovation?

3. Do you agree that for an organisation to innovate it must have

sufficient capacity?

4. Is adopting innovation worth the risk involved?

5. Do you agree with this statement: 'It is more effective for a

business to have a flawless operations strategy than introduce

innovation.'

6. How do you measure innovation?

7. Adopting innovation incrementally is more effective than

instantaneous innovation.

8. Please state why?

9. Is it important for an organisation to secure highly skilled staff

to bring about innovation?

10. Please specify why?

11. Effective leadership is essential to push the though process

of innovation?

12. Do you agree that innovation will distract an organisation

from achieving its set goals?


14. Do you consider that innovation within small medium

enterprises (SMEs) is important?


16.Without innovation SMEs can never grow and remain

sustainable


87

18.If adopted correctly can innovation ultimately improve the

performance of SMEs?

19. Is innovation worth the risk to SMEs?

20. What management methods do you think can stir the

process of innovation?

A. Total Quality Management

B. Business Process Re-

engineering C. Six Sigma D.

Lean Operations

21. Are you aware of these management principles?

22. Can these management processes be used within SMEs?


Question 7 7.Adopting

innovation

incrementally is more

effective than

instantaneous

innovation.

Response Response Q.8

Person 1 Yes It is less riskier and changes can be made subtly w ithout imposing greater costs

Person 2 No

I m not quite sure of the distinction. I w ould say that building something different

through innovation needs to be carried out w ith speed and decisiveness (learning

w hat happens - and if it w orks is really important - you have to be able to fail fast).

Introducing innovation should not be in bits and pieces. Equally innovation needs

to be thought about so even it appears all of a sudden to the user/customer it is

likely to have gone through a signif icant gestation period.

Person 3 Yes Too much could create conflict w ith staff and lose customers’

Person 4 Yes Low er risk and people are more likely to adapt and change more effectively.

Person 5 Yes Sudden changes w hich are untested can prove detrimental to business. Staff need

to adapt to change in a gradual w ay

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Person 6 Yes

Some innovation w ill fail or require a rethink, instantaneous innovation suggests to

me the idea of pan functional or pan entity step change and the risk of that could

destabilise the business as usual and thus take aw ay the very funding that is

required to innovate

Person 7 No Innovation can be a light bulb moment and must be grabbed w hen opportunity

arises.

Person 8 Yes Small changes made to products can be successful, it does not alw ays have to be

brand new , radical innovations

Person 9 Yes its something original and new in w hatever f ield it breaks into and helps you

maintain a foothold

Person 10 No

Often in business you need to adopt marketing innovation ideas or be

instantaneous to quickly adapt to a fast moving market.

Often it depends on the business that you w ork in. Small medium businesses may

not to adopt innovation incrementally to ensure profit and sustainability and

minimise risk in order to survive

Person 11 No

Incremental innovation w ill not bring the ROI alone, it needs to be combined w ith a

suitable balance portfolio of risk and return. Blockbuster innovations w ill change

the landscape and

Person 12 No ..

Person 13 No Innovation involves getting an advantage over the competition. sometimes speed

can be crucial

Person 14 Yes

Incremental innovation enables an organisation to monitor and control change

effectively, without risking the benefits previously achieved. Adjustments can then

be made from the feedback received. There is less risk to the business w ith such

an approach.

Person 15 Yes A balance strategy w ill lead to sustainable grow th rather than it being a short term

fix.

Person 16 Yes

For an SME innovation is a w ork in progress and has to be adaptable, by

implementing incrementally it can be changed if necessary, wholesale change can

be highly detrimental

Person 17 Yes

Incremental innovation is vastly more popular as it carries less risk. Company's

w ho produce a product that is successful and w ell managed, build considerably

more human Capitol and competencies.

By making continual improvements they keep the produce relevant, competitive

and keep the cost dow n.

Person 18 Yes Slow ly slow ly catchy monkey

Person 19 Yes Time and thought are essential

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Person 20 Yes

For a smaller company, investment in a large scale project can be detrimental to

the future profitability of the company on the w hole. Innovation requires risk and all

out innovation can be too risky for especially smaller companies to bear. Also, if

the innovations are technical, there is alw ays the risk of being the originator of a

f law ed prototype from w hich other companies can subsequently learn.

Person 21 No It isn't necessarily more effective as less risky.

Person 22 Yes evolution is alw ays more sustainable than revolution

Person 23 Yes In danger of throw ing the baby (good existing practices/goods) out w ith the

bathw ater (bad practices/poor goods)

Person 24 Yes

To do it successfully it needs to be done gradually so the company can learn w hat

happens w hen slight changes are made and act to stop or change if there are

negative effects.

Person 25 Yes To proceed incrementally seems to my inexperienced a w iser w ay forw ard,

checking processes f irst.

9.Is it important for an

organisation to secure

highly skilled staff to

bring about innovation?

Response Response Q10

Person 1 Yes Without the presence of a skilled w orkforce there w ill be no new ideas so innovation

becomes pointless

Person 2 No

I w ant to type not necessarily. The people in an organisation know the answ ers and

probably the brilliant answ er. Helping them understand this and bringing it to the fore is

often the role of people w ith a certain skill. How ever, I believe one of the tricks of

generating innovation is bringing together people of all skills into a comprehensive mix

w here unique ideas can surface. For this to w ork even the people that understand how to

generate innovation need to have a comprehensive outlook.

Person 3 Yes How else do you innovate

Person 4 Yes

Highly skilled staff are required to either facilitate/capture the innovation from w ithin,

create it from w ithin, or to identify/capture it externally and then introduce and embed it

into the organisation.

Person 5 No Training and management of existing staff w ho have a track record of performance is

preferable to bringing in new staff

Person 6 Yes

Skills in this respect are behavioural as w ell as hard technical skills. Importing or

identifying existing people w ho are + behaviours & + skills, or at least + behaviours and

thus are open to new skills; is a pre-requisite to landing the necessary change in the

operation and creating some form of change champion function to promote transition. This

is as true of innovation as the now tired term 'transformational change', as the

fundamental innovation is more than technical i.e. it is cultural.

90

Person 7 Yes It is essential to have know ledge to apply changing innovative techniques, innovation is

many things but usually applying existing technology to new environments.

Person 8 Yes They must know the market w ell and must drive the business to be able to provide a

product or service better than its competitors

Person 9 Yes as you need to have new ideas to grow and develop also keeps you at the forefront in

w hatever f ield

Person 10 Yes

Initiative and know ledge is crucial and experience is vital. Skilled staff can provide this.

Training someone w ho is not highly skilled can often impede funds and time to ensure full

know ledge of a company.

Person 11 Yes It's all about the people understanding w hat is required identifying unsatisf ied needs and

f inding appropriate solutions. That requires skill

Person 12 No .

Person 13 Yes You need people w ith the capability and proficiency to bring about change

Person 14 No

It depends on the complexity of the innovation that is being considered. Not all innovation

that may be put in place, w ill require highly skilled staff to enable an organisation to benefit

from it. How ever, training may be required in certain circumstances and a budget may

have to be set aside to deal w ith this aspect.

Person 15 No Any firm needs a mix of people w ith differing levels of skills and motivation is an important

factor. Some highly skilled people are not alw ays motivated.

Person 16 Yes keen amateurs don't have the necessary experience to adopt and implement

Person 17 Yes

Innovation communities hosted by employee and senior management prove just as

effective.

Depending on the initiative, companies often feel the f inancial risk is too high thus more

corporate decisions are made.

No- it's not important. It is a decision.

Person 18 Yes Capacity for clear thinking and experience

Person 19 Yes It needs courage and experience

Person 20 Yes

Yes, as true innovation should be backed by experience and know ledge. But companies

shouldn't be blind to the existing skillsets from w ithin their organisation. They shouldn't

alw ays assume expertise w ill alw ays come from outside.

Person 21 Yes Employees are an organisations' greatest asset. It is w orth investing in w orkers to bring

about innovation.

Person 22 Often naivity leads to new perspectives on old w ays of doing things

Person 23 Yes Need a focus for innovation, that usually comes w ith expertise (not many Archimedes

around)

Person 24 Yes Staff need to be highly skilled in the certain product area e.g. understand w hat w orks w ell

and doesn't in order to innovate new and improved products.

91

Person 25 Yes Know ledge is important

12 .Do you agree that

innovation will distract

an organisation from

achieving its set

goals?

Response Response Q 13

Person 1 Disagree It is a necessary risk to achieve growth

Person 2 Strongly Disagree

Either the innovation is the matter of the business in w hich case people should know and

be involved in it or it is a new venture when to some extent the team engaged in the w ork

w ill be isolate - how ever there still might be involvement.

Person 3 Unsure Oh goody

Person 4 Unsure Depends on the magnitude and type of the innovation

Person 5 Disagree Innovation is an important part of business that w ill compliment progress and enable goals

to be met

Person 6 Disagree An organisation that has no explicit innovative goals is stuck and thus heading backw ards

in technological and competitive terms.

Person 7 Disagree Innovation is a quicker w ay to an eff icient or sustainable outcome but not a strategy to

achieve outcomes in themselves.

Person 8 Disagree Innovation may be at the heart of a business. It may never achieve its goals if it does not

innovate.

Person 9 Disagree it should not distract you from achieving goals it should help to achieve and advance

Person 10 Disagree

Innovation allow s a business to grow and achieve set goals. In order to achieve goals

companies must innovate to ensure profitability, sustainability and survival. Without

reacting and innovating goals cannot be achieved as Small businesses will be undercut

and hit by competitors w ho are innovating

Person 11 Disagree Without innovation all companies w ill die a slow and painful death.

Person 12 Unsure .

Person 13 Unsure It depends how focal innovation is to those goals. Surely if a company is highly innovative,

innovation w ill be a crucial part of any strategic goals.

Person 14 Disagree A w ell run organisation w ill not lose sight of its goals, w hatever project may be in hand at

any particular time.

Person 15 Disagree Innovation is part of achieving goals like profitability and should form part of any business

plan.

Person 16 Disagree innovation can be a motivator in its ow n right if staff can see that it improves their w ork

experience and ultimately the running of the company

Person 17 Disagree I think it can; but w ith organisation, planning and deliberation. There is no reason for it to

happen. Innovation. Should benefit the current ethos of the company not over shadow it.

Person 18 Disagree Forw ard thinking is alw ays good

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Person 19 Unsure It depends on the people w orking and organising

Person 20 Unsure

It may be that the specif ic innovation is vital in helping a company achieve their goals. Or

it may that innovation changes a company's goals completely (w hich can be for the better

or the w orse). I think companies should be careful to keep a focus to their decisions to

innovate, and not be dazzled by possibilities that don't reflect the company’s goals or

strengths.

Person 21 Unsure It depends on the organisation's size and leadership

Person 22 Disagree There are alw ays more w ays to achieve results

Person 23 Disagree provided it is gradual it w ill not cause undue distraction from everyday business

Person 24 Unsure Depends how much resource they take aw ay from the other goals of the company.

Person 25 Unsure Not enough business to be sure

14. Do you consider

that innovation within

small medium

enterprises (SMEs) is

important?

Response Response 15

Person 1 Strongly Agree It w ill encourage new opportunities and growth

Person 2 Strongly Agree Building something new is critical to forw ard momentum and sustainability. Doing more of

the same - even a little differently is not good enough

Person 3 Agree er

Person 4 Agree To create a competitive edge

Person 5 Agree Innovation allow s small medium businesses to embrace change

Person 6 Strongly Agree The above answ ers really cover it off, one might argue that the w heel turns slower with

established SMEs but start ups are often destructive to competitive positions

Person 7 Strongly Agree Innovation is best delivered by those primarily carry out the task.

Person 8 Agree Most businesses could benefit from innovation

Person 9 Unsure no idea

Person 10 Strongly Agree

With the rise of big corporate companies small businesses need to f ind w ays to survive.

They need to keep up to date w ith technology, marketing, and other areas of business. It

allow s them to stay afloat in a w orld that is increasingly competitive

Person 11 Strongly Agree competing w ith large players requires a fresh approach and your customers need a

reason to use your products

Person 12 Agree .

Person 13 Agree Small companies need to w ork really hard to gain a competitive advantage. Being

innovative is a good w ay to do so.

Person 14 Agree Innovation is important, because it assists SMEs to remain competitive.

Person 15 Agree It is a necessary part of any business

Person 16 Strongly Agree even SMEs cannot stand still, innovation is critical to keep up or even ahead of

competition, and can be used as a motivator for staff to improve w ork experience

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Person 17 Agree It's Important for SMEs to Develop. Economic grow th relies on the grow th of such

businesses.

Person 18 Agree Again forward thinking

Person 19 Agree It is easy to become static

Person 20 Agree

Because often they have to be more creative in how they compete and the services they

provide. If they cannot provide value by scale or assurance by being long established as a

market leader, often a SME w ill have to offer something different. A good example is how

Streetcar (now merged w ith Zipcar) implemented the use of innovative technology to give

its members the f lexibility that other large car hire companies could not offer their

customers.

Person 21 Agree To compete w ithin the market and set create a reason for grow th.

Person 22 Agree Innovation is more achievable in smaller f lexible units

Person 23 Strongly Agree Small businesses need a niche market or competitive edge to survive with the big boys

Person 24 Unsure Depends on the product.

Person 25 Strongly Agree Necessary to move forward

16.Without innovation SMEs

can never grow and remain

sustainable


Person 1 Agree Important for small businesses to continuously innovate to remain competitive.

Person 2 Strongly

Agree The s curve

Person 3 Agree no variety and your product is f inite

Person 4 Disagree Because they can f ind alternative w ays to be competitive, e.g. re-locate to a low cost economy,

create a w orld class organisation to drive better eff iciency

Person 5 Agree Businesses would remain static and not change and develop

Person 6 Agree Life moves on and even the tardy sectors will leave them behind over a decade, this brings the

question of leadership and follow ship strategies of course

Person 7 Agree Companies w ho don't innovate go out of business.

Person 8 Strongly

Disagree some SMEs can survive from simply providing a good, reliable service

Person 9 Unsure no idea

Person 10 Unsure It depends on the business. Different businesses can survive without innovation if their no in a

competitive f ield.

Person 11 Strongly

Agree w ithout innovation someone w ill eventually produce a breakthrough product and kill your market

Person 12 Agree .

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Person 13 Unsure Some companies may have a niche w hereby they do not need to innovate. Otherw ise it may be

tricky to remain sustainable.

Person 14 Strongly

Disagree It is reputation that counts, not innovation. Innovation assists profitability.

Person 15 Disagree

Innovation is necessary to achieve growth and profitability but it is only one part of a business plan.

Businesses can grow without innovation but to assist in achieving maximum grow th and

sustainability, it is necessary

Person 16 Strongly

Agree w ithout innovation SMEs w ill fall behind to the extent that they w ill no longer exist

Person 17 Unsure They can remain sustainable? If their product is considered vital or a common necessity?

Person 18 Agree Fresh minds and lively brains keep a business alive

Person 19 Agree Change is refreshing

Person 20 Disagree

Because sometimes if a business has a core offering, works hard to establish a good reputation and

deliver at a sustainable price they can have a long and successful lifespan. I.e. small scale

corporate/professional cleaning companies.

Person 21 Agree

There w ould be no reason for the organisation to grow or remain

sustainable against its competitors w ho may be more innovative.

Person 22 Unsure Sure there are some that grow without innovation

Person 23 Disagree They may have a niche market/product that means for the immediate future they need not prioritise

innovation

Person 24 Disagree A lot of small companies do very w ell from just one product. Again depends on the product.

Person 25 Agree Without innovation a business would stand still

22. Can these

management

processes be used

within SMEs?


Person 1 Yes They can be utilised if the organisation has the suff icient resources and timescale.

Person 2 Yes Yes these methods can stir innovation yet they are not enough. Bringing innovation to bear needs an entirely different

w ay of thinking. All of the above methods are designed to achieve gradual improvement of existing systems.

Person 3 No I dont know what they are

Person 4 Yes These processes can be used in any organisation, providing they are correctly led.

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Person 5 Yes Total management quality enables businesses to provide a strong performance model w ith a mark of excellence. The

quality mark demonstrates to users of the business strong management and the w illingness to innovate and change

Person 6 Yes

This is a guarded yes, I w ork in multiple sectors and at SME and corporate scale too. The light touch use of any of the

above principles is an excellent platform for designing the right interventions, the corporate tendency to build self -

perpetuating industries around such methods delivers too much distraction, cost and overhead for SMEs. The people

w ho lead SMEs are mostly unimpressed by the technical or intellectual merits of prescriptive methodologies, they sense

and judge on outcome & pace.

Person 7 Yes Systems can be tailored to suit the size of the organisation.

Person 8 Yes Some can use them, but a lot of SME ow ner/managers will not have studied business at university etc and so may not

know the theories behind management principles

Person 9 No no idea

Person 10 No Unsure

Person 11 Yes

All of them are relevant in encouraging individuals and companies to think about the challenges they face and

quantifying them. How ever, a process driven approach can and often will inhibit innovation as it soon may become a box

ticking exercise. The key is to remain a naive observer w ith a childish enthusiasms to improve things.

I have answ ered question 20 w ith four ticks but I actually f ind them all limiting in my field of innovation

Person 12 Yes .

Person 13 Yes

I have put yes, but I feel some of them may be more beneficial than others for SMEs. Lean operations is probably one of

the more crucial, as resources are likely to be thinner and by running a lean operation this can help reduce w aste and

maximise the potential to make profit.

Person 14 Yes These are management principles based on generic models

Person 15 Yes I am not aw are of Six Sigma so I am unable to comment on it's use w ithin a business, but all the other management

techniques can be used to a greater or lesser extent w ithin the effective management of a business

Person 16 Yes even the smallest of companies can benefit from processes as long as they don't hinder daily operations, processes can

focus individuals and the organisation as a w hole, and if in place, can make grow th a lot easier

Person 17 Yes

TQM is important in every business, those producing and those initiating are equally as important in the success of the

product.

Six sigma us all about identifying strengths and w eaknesses within a company.

All of these processes hold merit and can be used effectively within any business.

Person 18 No Cannot answ er this question as I don’t fully understand it

Person 19 No I don’t know enough to answ er that question

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Person 20 Yes Because, though I know nothing about them, I am sure that a company can apply most management principles to most

business situations if they bend them into shape hard enough )

Person 21 No N/a

Person 22 Yes Just guessing as don't really know what they all are

Person 23 Yes The 4 management processes can be applied to any business regardless of size

Person 24 Yes Not sure.

Person 25 Yes Insuff icient know ledge to answer

97

30%

32%

8%

15%

15%


Improve Growth andPerformance

Product Development

Survival


8.2 Appendix 2

What are the main drivers of innovation?


Improve Growth and

Performance

Product Development

Survival Technological

Change

30% 32% 9% 15% 15%

98

20%

56%

12%

12% 0%


agree = 56%

unsure = 12%

disagree = 12%

strongly disagree = 0%

8.3 Appendix 3

Do you agree that for an organisation to innovate it must have sufficient capacity?


Agree = 56%

Unsure = 12%

Disagree = 12%


99

8.4 Appendix 4

Is adopting innovation worth the risk involved?


agree = 64%

unsure = 12%

disagree = 0%

strongly disagree = 0%

0%

10%

20%

30%

40%

50%

60%

70%

strongly agree =24%

agree = 64% unsure = 12% disagree = 0% strongly disagree =0%

100

8.5 Appendix 5

Do you agree with this statement: 'It is more effective for a business to have a flawless operations strategy than introduce innovation.'

strongly agree = 4%

agree = 0%

unsure = 36%

disagree = 52%

strongly agree = 8%

4%

0%

36%

52%

8%

strongly agree = 4%

agree = 0%

unsure = 36%

disagree = 52%

strongly agree = 8%

101

16%

12%

40%

16%

16%

profit = 16%

growth = 12%

improved performance =40%

new products = 16%

sustanability = 16%

8.6 Appendix 6

How do you measure innovation?

Profit = 16%

Growth = 12%

Improved Performance = 40%

New Products = 16%

Sustainability = 16%

102

56%

40%

4%

0%

0%


Agree = 40%

Unsure = 4%

Disagree = 0%


8.7 Appendix 7

Effective leadership is essential to push the though process of innovation?


Agree = 40%

Unsure = 4%

Disagree = 0%


103

0%

0%

36%

60%

4%

Strongly agree = 0%

Agree = 0%

Unsure = 36%

Disagree = 60%


8.8 Appendix 8

Do you agree that innovation will distract an organisation from achieving its set goals?

Strongly agree = 0%

Agree = 0%

Unsure = 36%

Disagree = 60%


104

36%

56%

8%0%

0%


Agree = 56%

Unsure = 8%

Disagree = 0%


8.9 Appendix 9

Do you consider that innovation within small medium enterprises (SMEs) is important?


Agree = 56%

Unsure = 8%

Disagree = 0%


105

12%

40%

20%

20%

8%


Agree = 40%

Unsure = 20%

Disagree = 20%


8.10 Appendix 10

Without innovation SMEs can never grow and remain sustainable


Agree = 40%

Unsure = 20%

Disagree = 20%


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8.11 Appendix 11

What management methods do you think can stir the process of innovation?

Total Quality Management

Business Process Re-engineering

Six Sigma

Lean Operations

40% 22% 16% 22%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Total Quality Management Business Process Re-engineering

Six Sigma Lean Operations

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8.12 Appendix 12

Interpretivist Study

Interview Questions – Semi Structured Interviews

1. What are the main drivers for your company to innovate?

2. What does innovation mean to your company?

3. Does your company have the sufficient capacity to innovate?

4. Does your company measure innovation?

5. In what ways has your company been innovative in the past?

6. What are the results of previous innovative ideas?

7. Have these innovations had an impact on business performance?

8. If appropriate would the use of management techniques such as TQM, BPR or Six Sigma help

your company to innovate?

9. Does your business initiate innovation gradually or instantaneously?

10. Would you consider innovative ideas from members of staff?

ma business and management dissertation

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