EFFECTS OF PRODUCT INNOVATION AND ORGANISATIONAL CAPABILITIES ON COMPETITIVE ADVANTAGE: EVIDENCE FROM UK SMALL AND MEDIUM MANUFACTURING ENTERPRISES

Ana Cristina O. Siqueira and Andy D. Cosh

Chapter 3 in Promoting Innovation in New Ventures and Small- and Medium-Sized Enterprises, 2017, pp 51-77 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We investigate the extent to which product innovation moderates the relationship between capabilities and competitive advantage among small and medium enterprises (SMEs). Using resource-based and capabilities theories, we examine capabilities as organisational routines, focusing on job rotation and multi-skilling. We examine competitive advantage by using logistic regression to assess the probability of top performance in productivity relative to most other firms in the same industry. Considering the path-dependence in developing capabilities and innovation, we use a longitudinal sample of 300 UK manufacturing SMEs in traditional and high-technology industries to evaluate the effects of innovating and using capabilities continuously over time. The results suggest that firms using job rotation or multi-skilling and introducing product innovations consistently from 2002 through 2004 are more likely to be top performers in 2004. The findings support a theoretical model according to which the association between capabilities and competitive advantage is moderated by innovation.

Keywords: Innovation; Enterprise; SMEs; Small and Medium-Sized Enterprises; SMBs; Small and Medium-Sized Businesses (search for similar items in EconPapers)
JEL-codes: O32 (search for similar items in EconPapers)
Date: 2017
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