Institutions and Innovation: A Study of ICT-MSMEs in India

Kaushalesh Lal and Shampa Paul
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Shampa Paul: Society for Development Studies

Chapter 10 in Globalization and Standards, 2014, pp 193-208 from Springer

Abstract: Abstract The huge base of manufacturing in India is characterized by the predominance of micro, small and medium enterprises (MSMEs), the export performance of which has been far from impressive. Poor product quality has often been attributed to inadequacy in institutional framework supporting innovation in MSMEs, even those in the knowledge-based information and communication technology (ICT) subsector that holds much promise for its global presence. Recognizing the ICT sector’s sensitivity to the global industrial environment, this chapter investigates the relationship between innovation activities and firm performance. They attempt to identify factors influencing innovation related to product quality and, in the process, investigate the role of institutional support in innovation activities of MSMEs of ICT clusters. In addition to traditional variables representing size and CEO characteristics, the study includes variables representing innovation strategies. The results show that firm-specific characteristics influence innovation activities and supporting institutional policies stimulate innovation; firms formally associated with state facilities (as the Software Technology Parks of India) pursued better innovation strategies than those which did not. The role of the state in terms of providing for both technological and infrastructural support is seen as a broad-based approach to improve innovation potential of MSMEs and, in turn, ensuring higher product standards through endogenous efforts.

Keywords: Micro; small and medium enterprises; Innovation; Information technology; Software Technology Parks of India; Quality consciousness; Competitiveness (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/978-81-322-1994-1_10

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