Title: Entrepreneurial innovations, market-driven intangibles and learning orientation: critical indicators for performance advantages in SMEs

Authors: Saara Hyvonen, Matti Tuominen

Addresses: Department of Economics and Management, University of Helsinki, P.O. Box 27, FIN-00014 Helsinki, Finland. ' Department of Marketing and Management, Helsinki School of Economics (HSE), P.O. Box 1210, FIN-00101 Helsinki, Finland

Abstract: Historically, small firms and start-up ventures have been skilled in developing innovations in order to exploit profitable market opportunities but less effective at sustaining the competitive advantages that are based on distinguished firm-specific resources needed to exploit those opportunities over time. In the literature, however, several questions of whether the argument is valid or not, remain open, and the results are mixed. Drawing on the Resource-Based Theory (RBT) of the firm and entrepreneurship literature, this study aims to explore the effects of entrepreneurial innovations, market-driven intangibles and organisational learning on performance advantages in the context of Small- to Medium-sized Enterprises (SMEs). A conceptual framework is developed, and the authors use data from 159 firms to test the hypothesised relationships. Our empirical results show that technological innovation capability and strong relationships with customers and supply chain partners are the key determinants of positional and economic performance advantages. The firm|s commitment to learning strengthens its position in the marketplace. Managerial innovation, in turn, is contingent on learning orientation, customer-based and supply chain assets. The implications of these findings for theory and practice are discussed.

Keywords: entrepreneurial innovation; market-driven intangibles; organisational learning; performance; small and medium-sized enterprises; SMEs; entrepreneurship; small firms; start-ups; competitive advantage; resource-based theory.

DOI: 10.1504/IJMDM.2006.011074

International Journal of Management and Decision Making, 2006 Vol.7 No.6, pp.643 - 660

Published online: 07 Oct 2006 *

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