Critically evaluate the extent to which innovation is essential for SMEs to be successful?
Business innovation can be defined as the ability to achieve the goals across the entire organization with the aim of accomplishing the business and its initiatives. Therefore innovation often begins with the idea of the generation and these are specified in certain session were the leaders are concerned with the desirability, feasibility and the validity of the business firm and their ideas.
There are many factors that lead to the success and survival of the innovation in a small business firm such as that the companies initiate the introduction of a new product or a new service into the market and these may however have few drawbacks like high costs for long periods payback, under developed channel of distribution or lack of good technologies and also no clarity on the needs of the customers (Alizadeh, M et al (2011). For an innovation to be successful it should be able to satisfy all the needs of the customers and must focus on the newness of the products that have been produced and much time and effort should b spent to overcome the problems that are faced by the new products and also there should be a resistances power to deal with all the uncertainty of the advantages and the risk of using the new products.
Innovation makes the productivity and also the business performance and can help in the growth and improvement in the business. Also the businesses that apply innovative styles have better performance in their productivity, have higher paid jobs, manufacture higher quality products and also grow faster in the markets. Innovation can also benefit in all the aspects of the business fields such as marketing and sales, information in technology and also in the financial human resources (Dougherty, D, & Hardy, C (2006).
The main challenges that are faced by the small firms are related to the way the effective innovation is taken place because of their size and limitations of resources and are also unable to develop new technologies to make the important changes in the present situations. The most vital challenge faced by a small business firm is in the exploitation of the opportunities of the innovation such as in managing the human resources, in the development and research departments, lack of the knowledge of the market information, environment regulation and national policies and also in the development of technologies (Forsman, H (2008).
The main differences between the small and big companies related to the innovation are in the speed of the process of decision making, the attitudes towards risk management, the allocation of resources, following in the rules and regulations and also in understanding of all the business techniques and how to manage it efficiently by appointing the right people for the right designations.
Alizadeh, M, Shabani, S, Fakhimi, R (2011). An entrepreneurial model of commercialization in science and technology parks. Isfahan, Iran: International Conference of Science And Technology Parks.
Dougherty, D, & Hardy, C (2006). Sustained product innovation in large, mature organizations: overcoming innovation to organization problems. Academy of Management Journal.
Forsman, H (2008). Business development success in SMEs. A case study approach. Journal of Small Business and Enterprise Development.