Innovation and Creativity in SMEs E-Book

Claudine Gay

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 384

Veröffentlichungsjahr: 2019

Beschreibung

In order to survive in their market and differentiate themselves from the competition, small- and medium-sized enterprises (SMEs), which represent more than 90% of companies worldwide, need to be creative and innovative. This book presents a conceptual framework for thinking about innovation and creativity in SMEs. It takes into account their strategic relation to their environment and the economic, technological and social changes that they face. Their ability to enhance their creativity with new ideas and to legitimize them during their implementation is also taken into account

Leseprobe

Table of Contents

Cover

Foreword by Wim Vanhaverbeke

Foreword by Gaëtan de Sainte Marie

Acknowledgements

Introduction

1 External Environment of an SME: From Determinism to Strategic Innovation

1.1. Introduction

1.2. The classic approach of the firm’s environment: a deterministic relationship (also) affecting the SME

1.3. From strategic intent to RBV: what level of emancipation is there from environmental constraint for SMEs?

1.4. The SME in a hypercompetitive environment: from emancipation to environmental transformation

1.5. Conclusion

1.6. Appendix: from the French province of Drôme to London, becoming an entrepreneur by using cultural resources

2 Stimulating the Innovative Capabilities of SMEs in an Ever-Changing World

2.1. Introduction

2.2. An understanding of current mutations

2.3. Evolving in a changing world: how can we boost the innovative capacities of SMEs?

2.4. Conclusion

2.5. Appendices

3 Innovation and Creative Slack in SMEs

3.1. Introduction

3.2. An SME’s internal components as a source of new ideas

3.3. The SME environment as a source of new ideas

3.4. Conclusion

3.5. Appendices

4 Innovation and Social Construction of a New Idea in SMEs

4.1. Introduction

4.2. The social construction of a new idea in SMEs through rhetoric

4.3. “Making” the social construction of a new idea in SMEs

4.4. Conclusion

4.5. Appendices

Conclusion

References

Index

End User License Agreement

List of Tables

Chapter 2

Table 3.1. Four ways to collaborate. Source: adapted from (Pisano and Verganti 2...

Chapter 4

Table 4.1. Rhetorical strategies to convince people of the legitimacy of a new i...

Table 4.2. Fictional illustrations of rhetorical strategies

Table 4.3. Examples of control and development indicators in terms of dimensions...

List of Illustrations

Chapter 2

Figure 2.1. Percentage of occupations experiencing disruption by the use of digi...

Figure 2.2. Probabilities of automation by occupation established by Carl Benedi...

Chapter 2

Figure 3.1. Examples of access to the creative territory for SMEs

Chapter 4

Figure 4.1. Evolution of the nature of the decision during the development of a ...

Figure 4.2. The key dimensions of design. Source: (Szostak and Lenfant 2015, p. ...

Figure 4.3. Multi-seller securitization arrangement (arrows indicate flows of pa...

Figure 4.4. Compendium of a design project. Source: Studio JBSB, 2018

Guide

Cover

Table of Contents

Begin Reading

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Smart Innovation Set

coordinated by

Dimitri Uzunidis

Volume 21

Innovation and Creativity in SMEs

Challenges, Evolutions and Prospects

Claudine Gay

Bérangère L. Szostak

First published 2019 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:

ISTE Ltd

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London SW19 4EU

UK

www.iste.co.uk

John Wiley & Sons, Inc.

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Hoboken, NJ 07030

USA

www.wiley.com

© ISTE Ltd 2019

The rights of Claudine Gay and Bérangère L. Szostak to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

Library of Congress Control Number: 2019938869

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library

ISBN 978-1-78630-317-2

Foreword by Wim VanhaverbekeDeveloping the Innovation Potential of SMEs through Collaborations Involving Proximity and Trust

Innovations are generally considered to be technological innovations, which have their roots in research in universities and research laboratories. They find their way into the market through large companies or start-ups financed by angel investors and venture capitalists. Most publications on innovation management provide this simplified picture and, as a result, small- and medium-sized enterprises (SMEs), which represent the majority of European firms, are rarely mentioned as a major source of innovation. This book by Claudine Gay, professor at the Université Lumière Lyon 2, and Bérangère L. Szostak, a university professor at the Université de Lorraine, takes the reader on an interesting journey to explain why SMEs can excel in innovation and surprise customers, competitors and value chain partners.

Academics and policy makers have paid little attention to the innovative potential of SMEs. It is only recently that SMEs have been recognized for their high innovation potential and the European Commission is currently implementing specific innovation policies for SMEs. There are several reasons why SMEs have not been in the spotlight for very long: for example, most SMEs work in B2B markets, which are usually hidden from most of us. However, SMEs do not only focus on product innovations: they also gain a competitive advantage by intelligently applying process innovations, organizational innovations, product commercialization innovations and strategic and business model innovations. This book provides an interesting overview of how SMEs innovate, challenging the traditional and narrow vision of innovation and innovation management that has been developed based on observations from universities and large companies.

One of the most challenging aspects of this book is that Professors Gay and Szostak integrate different perspectives and methodological approaches to examine the innovative potential of SMEs. They focus on the role of the entrepreneur, organizational culture and business model innovation in understanding this potential. Second, they focus on employee selfmanagement as a source of innovation and the role of design thinking in managing creativity in small businesses. Last but not least, the role of open innovation for SMEs is highlighted in Chapter 3, which summarizes an interesting and refreshing approach to unlocking the innovation potential of SMEs.

I published two books on open innovation in SMEs in 2017 and 2018 respectively. This book by Professors Gay and Szostak builds on my previous reflections and integrates the search for external knowledge by the management of innovative SMEs. What are the typical advantages and challenges for innovative SMEs?

First of all, the good news for small businesses is that because of their small size, they have the ability to be faster and more adaptable than large companies. Experimentation is the key to innovation, and collaboration with partners helps companies with limited resources to carry out the discovery process on a larger scale. By tapping into open innovation networks, SMEs can change their business models without having the necessary technology in-house. However, while open innovation networks have the potential to make SMEs more profitable, they only work effectively when the value created jointly is significantly higher than the value produced by the companies when they work on their own. And the true value of open innovation lies in the ongoing experimentation process, which produces new and unexpected opportunities for partners. SME managers must therefore develop and maintain such networks of innovation partners in order to improve their own business success.

In addition, personal connections and trust are essential for open innovation partnerships between SMEs, and the entrepreneur who launched the network generally leads the network. The advantage highlighted here is that an SME can activate this network and therefore innovate faster than anyone else in the industry because it knows the capabilities of each partner and can activate these external skills, which leads to faster innovation. The reason? Relationships are based on trust, and trust relationships lead to open and rich collaborations, accelerating innovation in SMEs. The strength and survival of an innovation network also depends on how SMEs manage mutual aid and conflict: SMEs in the network must support partners in difficulty, as they are the weakest link in the chain. Similarly, conflicts between partners undermine cooperation: managers must address them quickly.

However, it must be recognized that this type of collective collaboration is not a natural reflex for many SMEs. Small businesses do not like to involve others in their decisions. The recent acceleration of new collaborative innovation models by large firms can help stimulate new thinking among small companies. As multinationals seek to accelerate their innovation pipeline, opportunities for SMEs to partner in open innovation platforms are increasing. In this sense, two steps seem important for me to highlight.

Because trust is so important, the first step for a small business looking to forge open innovation partnerships is to think about its best customers and suppliers – those with whom it has worked the longest and those in whom it has the most confidence. By discussing ongoing projects with these value chain partners, savvy entrepreneurs can propose solutions to innovation challenges in the medium term, creating a new dimension to the partnership. The second step is to establish relationships with local research institutes or universities, which can help provide the expertise needed to bring new ideas to market. Small businesses should look for such partners. Face-to-face contact with a partner is necessary and this implies an essential proximity. For example, a local university with a good track record of partnering with companies can help SMEs adapt new products, change business models and introduce new technologies.

Innovations do not have to be radical. SMEs can stimulate sales and profits by importing ideas already used in another industry or by innovating the business model. In the solar energy sector, for example, First Solar has boosted sales to consumers by offering them an innovative financing package that requires no cash payment to install a solar panel system on their roof. Instead, the buyers rent the solar panels in combination with a 15-year contract to purchase the electricity produced by the panels. SMEs are very innovative in the development of new business models, so we should not focus simply on technical or product innovations.

To conclude, I would like to remind you that SMEs are the backbone of the European economy, but most of them are not yet innovating or are not fully using their innovation potential. I hope that this book will help SME managers to start their innovation journey. Once the decision is made to choose a new product or business model, SMEs will automatically open up and innovate with partnering organizations because they do not have the necessary internal resources and skills. Managing the partner network is new for SME managers and is the most difficult challenge in their transition to an innovative company. With this in mind, this book is a must read for anyone interested in how to successfully manage the transition to an innovative SME.

Wim VANHAVERBEKE1

NEOMA Business School

ESADE Business School

1

See the website:

www.wimvanhaverbeke.be/

.

Foreword by Gaëtan de Sainte MarieInnovating in SMEs or How to Make Your Company Collaborative and Desirable

One day, Pierre Bellon, founder of Sodexo, who made the company he created a world champion, answered the following question: “What explains Sodexo’s success?” His answer was wonderful in my opinion: “The sum of our successes is slightly greater than the sum of our failures.” An SME manager knows that failure is part of the road to success, and that it is a source of continuous improvement.

Before creating PME Centrale in 2001, I had created my first company in Sydney, which was a kind of first cousin, so to speak. It met the same objective: to pool SME resources to make them stronger and more together. This Australian company did not work. Among the mistakes I made, the most significant was probably the following: I prepared my offer with my partners on the basis of the intuition I had, and once the offer was packaged, after many months, I went to meet prospects. It was a failure... The idea was perceived as excellent, but the SME owners I met were not ready to change: I was thinking too far in advance; the step was too significant to take, etc. So, by creating PME Centrale in France, two years later in 2003, and Qantis in 2018, I proceeded completely differently: I kept my intuition (which was the same!), and I co-constructed the offer with the first members. It was not easy, but it eventually worked, because we adapted the offer to their needs and, little by little, are broadening our scope of proposals. Since then, all Qantis subsidiaries and brands have been created according to the same process. Our customers are at the heart of the innovation process and the creation of new projects. We have also included it in the baseline of the Qantis collaborative platform: “Co-create, Connect, Commit.”

In my opinion, the collaborative phenomenon can become an asset to put up your entrepreneurial sleeve, and a source of permanent innovation for SMEs. In the book Ensemble on va plus loin, which I co-wrote with Antoine Pivot, we describe how to implement this collaborative economy and how it allows managers to develop their companies in collaboration with their stakeholders (customers, suppliers, employees, etc.). Here are three simple principles, taken from the book, to integrate the collaborative economy into an SME.

First principle: put the customer back at the center! It is difficult to create a company, convince its first customers and then recruit its first employees, train them and achieve a certain balance in which profits feed the progressive development of the structure. It is so difficult to reach this moment when everything seems to be working, when customers are satisfied and employees are invested, that the simple idea of rethinking everything to get the machine running again can frighten many people. The problem is that, unconsciously, each company is gradually moving away from the full satisfaction of its customers. Soon, efforts become more limited, innovation is less voluntary, desire less present, etc. In fact, the customer leaves their natural place at the heart of the company to leave it to habits and formulas such as “we’ve always done it this way”.

The collaborative economy challenges these behaviors, because this model consists of building its service with a community of customers. In other words, it is the community that decides, and the company responds to its needs. The interest here is that customers are very often on both sides: they participate in the creation of the service and they consume it. They therefore know how to continuously improve the offer since they play the role of both suppliers and customers. For the company, it is “only necessary to” analyze their behavior and listen to their needs in order to constantly innovate.

Second principle: create a community of trust. The great success of the collaborative economy is that it has won the battle of trust. Its purpose is to enable clients gathered in a community to also provide services to each other, for example carpoolers for BlaBlaCar, companies for PME Centrale and Qantis. In short, “Together we are stronger and we go further”. These communities often existed before these companies, but there was no tool to make it easy and intuitive to connect them. And, of course, offering a simple digital platform is not enough. Moreover, at PME Centrale, we started without a platform. The most important thing was to create the conditions for trust between community members, and between the community and the company. BlaBlaCar, for example, surveyed its users and found that those they trusted most were their friends and family, then just after that, other BlaBlaCar users with a good rating on the platform, and much further away, their own neighbors! In other words, they trust strangers in the same community more than people they encounter every day.

How is that possible? These platforms have endeavored to create a system that values quality and compliance with the commitment made. Almost always via notes that users give each other, and also through video training of new members, charters, etc. At Qantis, it is the team that plays this role by being in permanent contact, in the field, with our stakeholders to verify the quality of our framework agreements and the implementation of our commitment.

Third principle: give meaning and return to common sense. The other success of the collaborative economy is to give or restore meaning. And what better way to promote team management than a shared sense! After all, in the end, customers and employees pursue the same objective: to ensure the permanence of the community with which they identify. The functioning of some cannot be contrary to the functioning of others. If employees and customers identify themselves to the community, it is because their membership in this particular group is meaningful. Let’s mention Airbnb and its dream: “a world where all of us can belong anywhere”... a world where we are at home everywhere. With friends, family, at home... in France as in Tanzania. And that’s the welcome message on the platform: “Welcome home!”

Concerning this third principle, it seems to me that collaborative economy companies have understood it better than others. Their customers know why they consume here and their employees know why they get up every morning. Defining the “why” and not just the “for what” of your company is the way to attract new talent, who particularly need this sense to mobilize, and ultimately to make your business desirable.

On the basis of these three principles, it now seems even more true to me to think of SME innovation in this context of a collaborative economy, because, in my opinion, innovation no longer has quite the same forms and characteristics. Even if the subject of innovation seems to have been largely explored, it seems necessary to return to an issue that is constantly being reinvented in companies, and mainly in our contemporary SMEs.

Gaëtan de SAINTE MARIE

Founding Manager of Qantis and PME Centrale

Acknowledgements

If you have grown up with an SME, if you have experienced, and sometimes suffered from, the daily life of being a business leader, experienced managerial and financial difficulties, strategic challenges of differentiation in highly competitive sectors, the joys of seeing projects succeed, of winning contracts, of creating jobs for troubled people, or of succeeding in developing their business, writing a book about SMEs is of great personal significance. This meaning is amplified when this in-depth understanding of an SME is enriched by decades of discussions, observations and research with these companies, their managers and employees.

With this knowledge and experience, it was truly satisfying to link them to other scientific expertise: innovation and creativity. And we owe this opportunity to several actors. We would like to thank, first of all, ISTE Ltd and Dimitri Uzunidis for their confidence in the writing of this scientific project. We also wish to thank the Research Network on Innovation (RNI), a network which has fed our thinking, through its important publication activities and the organization of scientific events. Through seminars and large-scale projects, we also think of our current and past research laboratories. They have made it possible to explore some of the ideas in the book, namely (in alphabetical order): BETA (UMR 7522), Coactis (EA 4161) and Triangle (UMR 5206). In addition, we would not have been able to develop the ideas of the book without the material support of our two universities (in alphabetical order): the University of Lorraine and the University of Lyon − University Lumière Lyon 2.

In addition, we would like to thank the many scientific and professional experts who have agreed to communicate to us their views on the subject of SMEs and innovation. We would also like to express our sincere gratitude to the various companies that shared with us their questions about innovation: these discussions and debates allowed us to review our results and thus discuss them further. The quality of these discussions has led us to focus on the relevance of conceptual developments from the point of view of the people involved, who support SMEs. Through this work, we sincerely hope to honor them, for the courage, endurance and humility they deserve in the face of obstacles, and, for most of them, for the humanism they display towards the many employees who work in SMEs. Finally, we are grateful to our students who inspire and motivate us to work on such projects.

Our final thanks go to our close colleagues, friends and family for their support in our “small business”.

Claudine GAY & Bérangère L. SZOSTAK

Introduction

Small- and medium-sized enterprises (or SMEs) have always been part of the economy in various forms (rural, family, craft, small production units, etc.). They have even historically been the spearhead of many countries’ economies: Italy, Japan, Portugal, Argentina, France, etc. (Marché et organisations 2017). Today, they represent between 95% and 98% of companies in the world1 (Marchesnay 2015). Although their influence should be put into perspective in view of the very large number of microenterprises within them, their overall socio-economic contribution should be highlighted. Indeed, it is an organizational form that can be considered decisive, particularly for growth, territorial development, sustainable development or the strive against unemployment (Boutillier and Uzunidis 2015). However, with few exceptions, it has long been neglected in the scientific literature, to the benefit of large companies.

Schumacher’s (1974) book, Small is beautiful, marks a first turning point. Then, it was the crisis of the 1980s that played a major role in the recognition of SMEs (Lescure 2001; Marchesnay 2015; Judet 2017). It was also necessary to rely on the influence of a few militant authors like Michel Marchesnay and, later, Olivier Torrès in France, as well Pierre-André Julien in Quebec. In the 1990s, we even witnessed a certain enthusiasm. In 1993, for example, French-speaking researchers (Quebec and France) published an overview of knowledge specific to SMEs2, which appeared “useless or superfluous” almost 40 years ago (Julien in St-Pierre and Labelle 2017, p. 10). During this same period, associations, scientific conferences and scholarly journals emerged. Training modules for students and seminars for socio-economic actors were developed. At that time, the emergence of a new research field dedicated to entrepreneurship3 (Gartner 1990) also contributed to the academic recognition of SMEs4.

As a result, SMEs gradually gained recognition from researchers. But the success was limited. The SME, one that has been in existence for many years, in reality, is still a little stuck between, on the one hand, the big company that is crushing it with all its weight and, on the other hand, the start-up that seduces the political and media world with its novelty, its promises of rapid growth and its media leaders. In addition, the recognition of the major role of intermediate-sized companies in the competitiveness of countries, particularly Germany, has led to a new obsession: growing SMEs to become ETIs.

Despite the recognition now acquired by SMEs, larger companies are still often the norm for optimal organizational functioning. According to transaction cost theory (Williamson 1975), any organization tends to grow if internalized costs are lower than market transaction costs. Yet, as Marshall showed at the end of the 19th Century, the economy can also be built on externalities that can flourish, for example, between small businesses in the same district. It is also likely that the explanation for this tropism towards large companies can be found elsewhere. As Torrès (2017) suggests, there is a representation bias5 that leads to assimilating the SME to a large company “in reduction”. Thus, SMEs are still too often appreciated in comparison to large companies, and in a negative way (Levratto 2009).

For all these reasons, it is not so easy to recognize two points. First, SMEs play a specific economic role. Second, they are also characterized by a unique organizational dynamic. This is particularly problematic with regard to innovation. Since innovation is knowledge-intensive, large companies are viewed as more conducive to it. The main reason is that innovation involves the creation, sharing and dissemination of a large amount of knowledge between the actors involved (Nelson and Winter 1982; Dosi 1988). The tacit nature of knowledge therefore makes transactions complex (and therefore costly) or even impossible. As a result, it seems less costly and less risky to internalize innovation in a large company than to limit it to a smaller company. Beyond this explanation, there are other reasons why large companies may appear more adapted, a priori, to innovation than SMEs. For example, the lack of internal resources and difficulties in accessing external finance are a major funding barrier to innovation in SMEs. Demand uncertainty and the cost of intellectual property play a role as well (see, among others, St-Pierre et al. 2017).

However, analyses dedicated to innovation carried out by different institutions show that SMEs are particularly innovative. In France, BpiFrance revealed that in 2015, SMEs invested 5.1 billion euros in R&D6. That represents an R&D intensity of 8.1%, while large companies invested on average 2.5% of their turnover in R&D (Schweitzer 2017). The Community Innovation Survey (CIS) conducted by the Member States of the European Union also confirms the commitment of SMEs to innovation. Experts agree on the same approach for SMEs in countries and regions such as China, Argentina, Polynesia, Africa7, etc. In addition, we know of many examples of SMEs that have become leaders or challengers in their sector because of their innovation and creativity. This is the case for Raidlight-Vertical, in the trail-running sector8, Haemmerlin, manufacturer of Made in France wheelbarrows. There are also former SMEs that have become intermediate-sized companies thanks to their dynamic innovation, such as Babolat, manufacturer of tennis racket equipment, or Prismaflex, leader in the production of large-format display and printing panels.

Some characteristics should be obstacles for SMEs achieving innovation. Why then are they so innovative and creative? The purpose of this book is to propose some answers to this question. However, we would like to come back in detail, first, on the specificities of SMEs compared to other companies, and second, on their innovative nature. We explain, thirdly, the positioning adopted in the book. It does not aim to be exhaustive. We highlight factors conducive to innovation and creativity that are insufficiently recognized and yet essential, particularly in the face of changes in our economy.

The specific features of the SME

The notion of specificity refers to a condition that has an original and exclusive characteristic. In the scope of this book, the SME is specific because it differs from other organizational forms9. We refer here to non-profit organizations (associations, trade unions, non-governmental organizations), or public organizations (public administrations, local authorities). On the other hand, it should be recalled that the concept of SMEs’ results arise, above all, from the need to classify companies into categories. The reasons for this ranking are twofold. First, they are very operational: they make it possible to apply accounting standards and define tax levels. Second, they are analytical: the ranking reflects the companies’ situations. This allows international comparisons to be made and differences to be explained.

In France, Decree 2008-135410 specifies the current criteria for defining categories of companies. It applies the law of August 4, 2008 on the modernization of the economy and in line with the recommendations of the European Commission. This decree includes the category of intermediate-sized companies. In this context, three classification criteria are used to define SMEs:

– the number of employees is less than 250, in accordance with European Commission criteria

11

;

– the annual turnover is less than 50 million euros;

– the balance sheet total may not exceed 43 million euros.

In France, the SME category includes microenterprises that employ fewer than 10 people and have an annual turnover not exceeding 2 million euros. However, they represent 96% of SMEs, and some of them are not active. Thus they are often analyzed separately.

In addition, it must be recognized that the classification of companies by size is very useful for reflecting the economic structure of a country or territory. For example, the French economic structure is characterized by a small number of large companies, a large number of SMEs, a very large number of very small companies (or MICs for microenterprises), and a shortage of EIT companies12. In Germany, intermediate-sized companies (or Mittelstand) are twice as large as those in France. However, this typology does not really allow us to understand the originality of SMEs. By way of illustration, let us take the criterion of the number of employees, which is mainly used to characterize the SME. We have to admit that it does not reflect reality. Indeed, some people are not included in the total workforce (trainees, apprenticeship contracts, the SME manager’s family members, and spouses). In addition, SMEs are increasingly outsourcing some of their tasks.

Thus, since the 1990s, scientific research has highlighted several other variables of a more qualitative nature that are specific to SMEs (Julien 1993; Marchesnay 2015). They mainly underline:

– the centralization of the manager’s decision-making;

– a low organizational structure (see the simple structure in Henry Mintzberg’s typology of organizations);

– a high dependence on access to resources (human, financial, material and immaterial, etc.);

– limited resources.

In addition, Olivier Torrès (2015) develops a stimulating approach to the specific nature of SMEs. They can easily develop close relationships at several levels: in terms of space (spatial proximity), hierarchy (hierarchical proximity); work organization with the division of tasks (functional proximity) and coordination (coordination proximity). They can also control the way information is shared (proximity information systems) or the decisions to be taken (temporal proximity).

However, SMEs are not static. They have evolved a lot. Some of these specific features should therefore now be revisited, as encouraged by Marchesnay (2015)13. First, the leader is not as lonely as one might imagine. Family, partners, such as accountants, bankers, suppliers, customers, but also employees, are important actors in the decision-making process. Leaders are increasingly trained. Some of them choose to join business leaders’ associations, such as the Centre des jeunes dirigeants14 in France. These groups can influence decision-making through advice, sharing of experiences, specific training and even mutualization of activities. Second, the SME is increasingly well structured and several factors explain this. We note a greater diffusion of management tools; digital technology contributes to this phenomenon (for example, remotely accessible and shared planning). Employees are themselves increasingly better trained and informed and are pushing for more structuring of the organization. Finally, partners (customers, suppliers, bankers) lead to more structuring and organization taking place. This is particularly the case when SMEs are in subcontracting relationships. Third, the issue of access to resources remains, of course, a major challenge, but it is much easier. However, difficulty is no longer specific to SMEs: non-profit organizations and large companies face relatively similar situations. But economic, social and technological changes offer them new access to resources, inter alia through the development of a digital and collaborative economy15. Fourth, resources remain limited, but they can be increased by exploiting the opportunities offered by the sector, the territory, inter-organizational relations, but also (and still) digital means (see crowdfunding).

On the basis of these conclusions, and respecting the quantitative variables retained in the institutional documents, we propose, as specific features of SMEs, to focus essentially on the qualitative variables. We formulate them, however, taking into account the above conclusions:

– decision-making by the leader, but under the influence of the closest stakeholders;

– a simplified (and not “simple”) organizational structure;

– a dependence (and not “high dependence”) on access to resources;

– limited resources, but easily mobilized, in particular thanks to the multiple local relationships fostered by SMEs.

All these variables were in our minds when writing this book, and, to begin with, when understanding its ability to innovate.

The ability of SMEs to innovate

There is no consensus on the contribution of SMEs to the economy. For some, they constitute a potential source for growth and employment (Hausman 2005; UEAPME 2015). Other researchers believe that it is actually a myth (Boccara 1998). We are convinced that, whatever their contributions, it is important to stimulate innovation within them and give them the means to succeed. Indeed, not all SMEs innovate16 and those that innovate do not systematically succeed. To approach this reality, we refer here to the concept of innovativeness17, that is the propensity of an organization to achieve innovations (Hadjimanolis 2000; Wang and Ahmed 2004; Kmieciak et al. 2012). It is the ability of an organization to implement any new feature within it, whether or not it exists elsewhere. However, this capacity is not easy to measure. Quantitative measures (such as R&D investments or patent filings), or surveys of SMEs’ innovation habits can be used. But understanding what enables SMEs to create, maintain and develop such capacity is essential to stimulate innovation. Research has also been carried out on the main brakes and drivers of innovation in SMEs (Madrid-Guijarro et al. 2009; St-Pierre et al. 2017; Seville and Szostak 2018a). One of these obstacles is that the appropriation of the value of innovation remains a key issue that is insufficiently considered in the specific context of SMEs (Le Bas and Szostak 2016; Corbel and Reboud 2018) (see Chapter 4).

This propensity to innovate concerns innovation defined in the broad sense. This is the process that leads to the creation of something new in the economy. It is common to characterize innovative activity by types of innovation. For a long time, technological innovation (product or process innovation) was at the top of the list. However, since the 2005 edition, the Oslo Manual18 has incorporated non-technological innovation through marketing innovation and organizational innovation. In sum, product innovation refers to the functionalities and/or characteristics of the product as a whole (techniques, packaging, product formula). Process innovation refers to the production or distribution method that is new or improved, involving concrete changes in techniques, hardware and/or software. Organizational innovation concerns the way in which the offer is designed and implemented in a company (practices, workplace organization and external relations). Marketing innovation involves implementing a new method of designing, packaging, placing, promoting and pricing the company’s offer.

To these traditional categories of innovations, we can add several others, typical of recent developments: market innovation, strategic innovation, business model innovation, managerial innovation, social innovation and responsible innovation. Marketing innovation involves creating a new market (new use of an existing product, new type of customers). The Blue Ocean Strategy illustrates this category of innovation (Kim and Mauborgne 2005). For example, the French SME “Les Trois Bras” offers a restaurant space on the motorway area of the Millau Viaduct. It is connected to two other markets: the promotion of regional know-how and tourism. Instead of being a technical and quick pit stop, the space is an opportunity to take time and enjoy, breaking with the traditional key success factors of the sector.

Strategic innovation involves changing the way the organization’s activity is carried out and can be achieved through business model innovation. The latter is understood as the creation of a new configuration of value for the sector, that is a new way of creating and capturing value (Eyquem 2017). For example, small video game studios have successfully differentiated themselves from large publishers by developing a multifaceted platform on the Internet by bringing together complementary and/or interdependent user groups (Parmentier and Gandia 2016). This type of innovation is currently central for SMEs (Chapter 2 explores this issue further).

Managerial innovation is a change of traditional managerial principles, processes and practices, or a change of regular organizational forms (Hamel 2006, p. 4). This change must be considered in relation to the company and/or the market (Mol and Birkinshaw 2009). These may include the Delphi method, Total Quality Management standards, Corporate Social Responsibility (CSR) strategy, lifecycle analysis, etc. Based on a qualitative study, Dangereux et al. (2017) then show that managerial innovation in SMEs can be used to legitimize actions undertaken with financiers, reassure clients, win new contracts and drive growth while remaining viable. This example thus underlines the importance of the social construction of a new idea for the legitimacy of the SME and its innovation capacity.

Social innovation is defined as a new response to needs expressed by a specific social group, not satisfied by markets and by public institutions (André et al. 2009; Moulaert 2009). This may involve, for example, areas in difficult situations, proposing solutions for people facing unemployment, old age, illness or disability. The emblematic organizations involved in this type of innovation belong to the Social Economy. These include associations19 that are similar to SMEs (see Janssen et al. 2012). For example, Dutertre et al. (2013) study the case of the Solidarauto solidarity garage network: the objective is to cover the mobility needs of the most vulnerable households. Research shows that such organizations have a significant capacity to exploit untapped resources (i.e. donations of broken down cars), to create a network of actors with little initial connection, and thus to break out of the established framework, resulting in socially successful innovation.

Responsible innovation is a more recent category. It is founded in particular within the framework of the European Responsible Research and Innovation project. It questions the potentially harmful consequences that innovation can have on society. This concept is still vague and evolving (Gay et al. 2018). However, the authors point out that this type of innovation promotes a capacity for innovation that is, in its process, more anticipatory, more reflective, more deliberate and reactive.

In addition to these categories of innovation, the question of the intensity of the innovation, the origin and nature of the innovative process is generally raised. Traditionally, a distinction is made between incremental innovation, which consists of improving what already exists, and radical innovation, which generally results in the creation of a new product. While the first form is gradual with a risk considered low, the second implies a significant change in the conditions of use by consumers, or in the production methods or technologies used and considered more risky.

Innovation can also be distinguished according to the origin of its process. Either it is driven by technology (or technology push, resulting in particular from R&D) and offers consumers an unexpected product/service, or it is driven by the market (market pull), following the expression of consumer needs, in a perspective that we now call user-oriented.

In order to clarify the innovation process, innovation can also be approached through the prism of organizational learning. Following on from March’s work (1991), we can then distinguish between so-called exploration and exploitation innovation (Chanal and Mothe 2005; Li et al. 2008). Exploration innovation is part of a long-term vision. It is a question of highlighting the organization’s ability to discover, renew and even create new resources and skills, enabling it to adapt to the reality of its competitive environment. Exploitation innovation is more in the short and medium term. It is a matter of focusing on the operational efficiency of existing resources and skills. The former would lead more to radical innovations, while the latter would lead to incremental innovations (Chanal and Mothe 2005). It should be noted that an organization can engage in either or both. And this is also the case for SMEs. This is reflected, for example, in exploration innovation, in the experimentation of radically new ideas, in the developed ideation of the SME’s employees. In exploitation innovation, this is displayed by the company’s success in mastering and improving existing technologies (Szostak 2017).

Beyond the type and intensity of innovation in SMEs, it is especially important to remember that many SMEs have a clear capacity to innovate, whatever the form of innovation. This translates, particularly in France, into significant R&D staff: nearly a quarter of employees dedicated to innovation are employed in SMEs (23%), and this figure increased between 2014 and 2015. Several factors explain this capacity in the case of SMEs. We will focus here on three main ones:

– the role of the manager and employees;

– the nature of the organization;

– the type of environment.

Concerning the first, we consider that it is the company manager (Van de Ven 1986; Hadjimanolis 2000) who should play the role of developing a corporate culture that values innovation, original ideas, experimentation and employee proactivity (Lumpkin and Dess 1996; Rosenbusch et al. 2011). The manager must engage in innovative and creative approaches, such as design thinking (Seville and Szostak 2018a), and allow their employees to do the same. Employee empowerment effectively offers SMEs the opportunity to benefit from their ideas (Carrier 1998); this managerial practice has a positive impact on the propensity to innovate (Farace and Mazzotta 2015). Concerning the second factor explaining the innovation capacity of SMEs, we refer to its ability to combine internal and external knowledge (De Oliveira Paula and Ferreira Da Silva 2017), with reference to the open innovation paradigm (Chesbrough et al. 2006; Spithoven et al. 2013; Vanhaverbeke 2017). This concerns the emergence of ideas, but also the marketing of the product for example (Lee et al. 2010; Henttonen and Lehtimäki 2017). An open and agile organization, which is the case for SMEs (Barzi 2011), is conducive to the development of the propensity to innovate. The simple structure and its proximity to customers and partners allow it to adapt quickly to market demand (Hausman and Fontenot 1999; Hausman 2005). Finally, and in addition to these factors, Mazzarol and Reboud (2009) show the importance of taking into account the formalization of SME strategy that depends on the degree of organization complexity and the level of uncertainty and risk in the environment. This is the third and final factor we want to take into consideration: the nature of the environment, its evolution and changes. The perception of this environment will differ from one SME to another depending on the degree of integration within it, via, for example, the sector, the nature of partner relations established with other environmental actors, etc.

In the end, we note that SMEs are characterized by a major challenge. On the one hand, they have strong capacities to innovate (Hausman and Fontenot 1999; Hadjimanolis 2000; Hausman 2005). On the other hand, innovation represents risks that SMEs cannot always keep up (St-Pierre et al. 2017; Seville and Szostak 2018a). The purpose of this book is thus to propose a framework of thought dedicated to SME actors and researchers concerned, in order to meet this challenge.

Positioning of the structure

On the basis of the reminders discussed here, we propose in this book to investigate innovation in SMEs more precisely. We consider that SMEs are not the reduced version of large companies (Torrès 2017). We are convinced that, despite certain inherent difficulties, an SME is an organization that is favorable to the development of creative ideas (Carrier and Szostak 2014). The SME is seen as a unique organizational unit. The innovation activities that give substance to its propensity to innovate are, as such, specific. In this book, we therefore propose to address arguments that seem to us to be enlightening in order to understand why SMEs have the propensity to be innovative and creative, and to implement innovations, when certain characteristics should prevent them from doing so a priori. Before that, we must talk about our working method and the structure of the book.