Organisational innovation in SMEs: The importance of strategic orientation and competitive structure

This study considers determinants of organisational innovation in small to medium‐sized enterprises (SMEs), as expressed by the number of product innovation adoptions. Drawing upon data from 150 manufacturing firms in Greece, the study attempts to identify the importance of strategic orientation and competitive structure. First, strategy‐driven characteristics, such as market orientation and learning, are shown to increase SMEs' innovative performance. Second, competition‐related characteristics, and in particular industry concentration and barriers to entry, appear to have significant effects on SMEs' innovative activity. Overall, the empirical findings suggest that market‐ and learning‐oriented SMEs facing strong competition tend to be more innovative. These results are discussed in the context of Greek SMEs in food, beverages and textile sectors, taking into account the specific conditions prevailing. Apart from providing some new evidence in the important area of SMEs, this study has also important implications for managers and policy makers while revealing considerable scope for further research.