A Quantitative Analysis of the Relationship between Drivers of Innovativeness and Performance of MSMEs

Abstract

ABSTRACT Globalization has produced remarkable changes in business structures and organizations across the world. A key upshot of these changes has been greater synchronization of economic activities across borders leading to emergence of trans-national production systems, organized as distinct global production networks. Advent of these networks has been followed by rearranging of industrial structures, which has influenced the process of local development. For developing country enterprises, successful entry into global networks has emerged as a key challenge. Entry into global chains promises upgradation of firm level capabilities from ‘learning’ through technology diffusion and exposure to international best practice systems of corporate governance. However, the ability of developing country firms to move into global chains and graduate to ‘high-end’ activities depends on their existing technology, as well as the support mechanism made available by national country governments. The productive entities that are mostly affected and face problems are the MSMEs. Small units are constantly struggling to survive and face pressure even in local and domestic markets. No enterprise can remain competitive without continuous technology upgradation and development. Small enterprises in developing countries largely depend on external sources like large organizations for their technology related needs. However acquiring technology from larger firms solely is not sufficient to bridge the technology deficient gap. The need of the hour is to develop technology indigenously within organizations. Firms should develop innovative capabilities for their survival and growth in the era of global competition. Technology advancement achieved through technological innovations enables firms to acquire or improve competitiveness through market orientation or quality improvement of products, among others. Technological innovation is considered to be an important strategy for technological developments in the organizations. It is with this backdrop that the present study probes the various factors influencing the tactical and technological development of organizations. This report is divided into five main chapters, the first chapter introduces about MSMEs, the importance of MSMEs, technology, importance of technology upgradation and status of technology development in Indian MSMEs. The second chapter explores the literature regarding the various factors influencing the tactical and technological development of organizations and identifies various gaps in the present literature. The third chapter puts forward the methodology to be adopted for carrying out the research work, fourth chapter presents the findings of survey X based results, the results obtained after quantitative analysis of survey data. Four main input variables are identified viz. entrepreneur role, regulatory corroboration, technology infrastructure and linkage capability and their effect on output variables viz. innovation performance, sales performance and product performance has been determined. Classification of various organizations surveyed has been done based on their performance in each key input and output factor. Correlation between each input and output factor has been established. Principal component analysis has also been used to reduce the various key issues under each input factor. The final chapter presents the results of the analysis and also points out the various limitations in present research and scope of future work in the present topic.