Innovation capacity and innovation development in small enterprises. A comparison between the manufacturing and service sectors

This paper explores what kinds of innovations have been developed in small manufacturing and service enterprises and what has been the degree of innovation capacity that small enterprises possess. In addition, it compares what differences there are across the manufacturing and service sectors. The empirical evidence is based on quantitative data gathered through an email questionnaire which yielded 708 qualified responses from the representatives of Finnish small enterprises with fewer than 50 employees. The analysis is based on descriptive statistics and non-parametric tests. The evidence displays a rich diversity of innovation patterns in small enterprises. The empirical evidence demonstrates only slight differences between the manufacturing and service industries while it indicates significant differences across the sectors within these industries. The value of the present study lies in the better understanding of innovation development in small enterprises. The rich diversity of innovation patterns in small enterprises suggests that diversity should also direct the policies aiming at supporting innovation development in the context of small business. Finally, applying these results will provide more specific questions for studying the nature of innovation development in small enterprises.

Research highlights
► Innovation capacity and developed innovations in small enterprises are examined.
► Innovation patterns in manufacturing and service industries are compared.
► Results show slight differences between the manufacturing and service industries.
► Findings indicate significant differences across the sectors within these industries.
► Characteristics of small enterprises as innovators across the sectors are provided.