Barriers to Retail Innovation: Evidence from Malaysian Retail SMEs

Innovation is the key to success for SMEs in various sectors. However, it is acknowledged that retailing is less innovative than other sectors within high-income nations. Although data has revealed the dominance of Malaysian retailing SMEs over others in terms of their contribution towards country‟s GDP, hence the performance of Malaysian retailing SMEs is still behind than retail SMEs of other developed countries. This paper argues that barriers to innovation are the major obstacles to achieve superior performance for Malaysian retail SMEs. Thus, the aim of this paper is to investigate the possible barriers to retail innovation. A simple survey was conducted among 230 retailers in the Selangor state of Malaysia to identify the most critical barriers to retail innovation. The descriptive analysis revealed that cost factors (high innovation cost, unavailability of finance, excessive perceived economic risks) are the major barriers to retail innovation. This study has significant implications as it provides useful insights regarding the most critical barriers to innovation in the retail sector. The Malaysian government can assist retailers in overcoming barriers to innovation through various financial assistance and training programs to face uncertain economic situations and to innovate more effectively. A detailed investigation is further recommended to the other states as well to assess all possible barriers to retail innovation among Malaysian SMEs. Aus. Aca. Busi & Eco. Rev Vol 2(1), January 2016, P 1-21