Assessment of the Innovation Capability of SMEs: Development of an Internet-Based Evaluation Tool

Due to increasing globalization and technological change, the importance of the capability to develop new products and bring them successfully onto the market – in the following referred to as innovation capability – increases not only for large enterprises but also for SMEs (Small and Medium Enterprises). In this paper, we firstly develop a model of SMEs’ innovation capability, divided into the five dimensions: innovation structure, innovation strategy, innovation resources, innovation activities, and innovation culture. Secondly, we explore if SMEs want external support to enhance their innovation capability and if yes, how this support could be provided. Thirdly, findings of the pilot study and the innovation capability model are implemented into an evaluation tool as a first step of external supporting activities. With the help of this tool, a database of the innovation capability of SMEs will be created to allow benchmarking and studies of innovation management in SMEs. INTRODUCTION: INNOVATION CAPABILITY AS A COMPETITIVE ADVANTAGE The capability to develop new products and bring them successfully onto the market is generally accepted as a source for competitive advantage. Due to increasing globalization and technological change, the importance of innovation increases not only for large enterprises but also for SMEs (Small and Medium Enterprises) as well. Nevertheless, partially due to limited resources, success factors, methods, or good practices in innovation management which are routinely used by large enterprises are mostly unknown to SMEs. In addition, some SMEs are not even aware of deficiencies and the potential to improve their innovation capability. In the following section, we firstly develop a model of SMEs’ innovation capability. The model integrates success factors for innovation management identified in literature, divided into the five dimensions: innovation structure, innovation strategy, innovation resources, innovation activities, and innovation culture. Secondly, we explore if SMEs see a need for external support to enhance their innovation capability and if yes, how this support could be provided. For this purpose, 21 general managers of SMEs were interviewed using a semi-standardized questionnaire. The interviews revealed the need for affordable and scalable consulting services. Thirdly, findings of the pilot study and the innovation capability model were implemented into an evaluation tool as a first step of external supporting activities. The evaluation tool enables managers of SMEs to assess their innovation capability and identify strengths and weaknesses. Furthermore, it provides suggestions for improvement. DEVELOPMENT OF THE INNOVATION CAPABILITY MODEL The evaluation of the innovation capability of any enterprise can be started with an input/output analysis with: Innovation Input: R&D ratio, Expenses for new products, Expenses for breakthrough innovations and new technologies, and Innovation Output: Number of new patents, Percentage of new products, Average age of products, Success rate of innovation projects. Based on input/output analysis and figures some estimation can be derived about the innovation capability of the enterprise. The analysis can be supported by comparative figures of similar enterprises (same industry, similar company size etc.). However, no conclusion in terms of the reasons for a weak or strong innovation capability can be drawn from these figures. Therefore, our reference framework for the further analysis

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