What is the importance of innovation to Small to
Medium Enterprises (Particularly in Australia), and what innitiatives
assist in fostering greater innovation?

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Request for Question Clarification by ragingacademic-ga on 12 May 2003 01:42 PDT

grover01 -

Thanks for submitting your question.
I've already done a considerable amount of research in relation to
this, and hope to complete your answer tomorrow.

In the mean time, any additional information you may want to add could
help me better focus my reply.

thanks,
ragingacademic

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Clarification of Question by grover01-ga on 12 May 2003 13:14 PDT

It is in regards to a computing thesis.
I have developed a website, and a university branch is operating this
website that monitors SME trend and opinion in a certain area.
I will be comparing the results with similar areas undertaken by a
national survey in the areas of business confidence and innovation.
Therefore I am seeking as much background information as possible in
relation to the importance of Innovation, as I have had limited
success , and limited research skills.

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Request for Question Clarification by ragingacademic-ga on 12 May 2003 23:34 PDT

grover01 -

Thanks for your clarification.

I continue to work on your question - have some great information, and
there is quite a lot of action in the SME arena in Australia in
particular.  I have quite a few sources and several pages worth of
information already.  Should be able to wrap this up for you tomorrow
(Tuesday).

thanks,
ragingacademic

Hi! Thanks for the question.

Since you said that you need background information as regards to the
importance of innovation to SMEs in Australia I have found the
following resources below, which discusses this issue. I will provide
small snippets from the articles but I highly recommend that you read
them in their entirety so as to get a more comprehensive understanding
of the source.

a.) “An understanding of innovation supports sound business decision
making and attracts young people into innovative and entrepreneurial
careers. Above all, innovation is a major factor in adding value to
manufacturing and industrial processes, improving the range and
delivery of services and creating new jobs.”

b.) “Australia's economic, social and environmental well-being is
underpinned by an understanding of innovation and the adoption of
innovative practices. In 2000, there were more than 1.2 million small
businesses in Australia, accounting for 49 per cent of all private
sector employment, and contributing 20.9 per cent ($75.3 billion) of
Australia's gross domestic product.”

“Innovation Awareness”
http://www.industry.gov.au/factsheets/index.cfm?parentUUID=8488DDC5-3A47-4021-8F511B6A48CE6CAF

c.) “Innovations may be used as a strategy for growth or survival.
Growth may be achieved if innovation enables the expansion of existing
markets or entry into new markets. On the other hand, firms may be
forced to match the innovation of rivals to maintain market share.”

d.) “The initial success of ‘born global’ SMEs is often based on
technologically unique products.”
 
e.) “In order to internationalise their operations, SMEs already
established in domestic markets usually need to develop new products
tailored to the demands of export markets.”
 
f.) “Once established in international markets, SMEs need to engage in
continuous product and process innovation in order to enjoy on-going
success.”

g.) “SMEs exploiting niche overseas markets inevitably face sales
ceilings, and so need to innovate in order to enter new niches and
continue to grow.”

“Growth, Exporting and Innovation in Manufacturing SMEs: Evidence from
Australia's Business Longitudinal Survey”
http://www.ssn.flinders.edu.au/commerce/researchpapers/00-10.htm 

h.) “Innovation leads to increased competitiveness, which in turn
leads to employment generation and wealth creation. Innovation has
long been regarded in the corporate world as a key differentiator
between the leaders and followers in the market and is recognised as
critical for business growth.”

“FOSTERING INNOVATION AND GROWTH”
://www.google.com.au/search?q=cache:VzTShCB6l3UC:www.newcastle.ieaust.org.au/uploads/POLICY%2520POSITION%2520-%2520Innovation%2520and%2520growth.doc+SME+innovation&hl=en&ie=UTF-8

i.) “Through innovation-led manufacturing strategies, the nation can
provide value-added exports to the ever-changing, competitive world.”

“Cultivating Innovation”
http://www.aph.gov.au/library/INTGUIDE/sci/innovation.htm 

-----------------
Australian SME innovation initiatives also provide some problems in
the process due to the business climate.

a.) “A falling proportion of manufacturing businesses are involved
either in product or process innovation. This cuts to the heart of
Australia's innovation performance and, if continued, would seriously
undermine Australia's position as a knowledge-based economy.”

b.) “Substantial falls in R&D expenditure by Australian businesses
since 1995 pose a significant threat to Australia's innovation
performance.”

c.) “The quality of critical innovation skills, particularly those of
Australian managers, is less than optimal.”

d.) “The manufacturing sector accounts for an extremely low proportion
of GDP compared to many OECD countries and continues to shrink. This
affects innovation because manufacturing still contributes most of
Australia's R&D and propensity to innovate. The composition of
Australia's manufacturing sector is under-represented in high and
medium technology sectors.”

e.) “The low and falling commitment of employers to staff training is
seriously undermining Australia's innovation efforts because of the
importance of skills in transforming information into knowledge and
knowledge into innovations.”

“Australian Innovation - The Clever Country”
http://www.abfoundation.com.au/ext/ABFound.nsf/a179753ea53913524a256840001f698a/723c7491dc362d6a4a256894001cd2f0?OpenDocument

------------------
Our next papers meanwhile provide insights on how to foster the
innovative initiatives among SMEs in Asutralia.

a.) “Recognise that Australian Industry, particularly SME's, needs
up-front access and support to conduct Innovation Ready audits,
establish programs for them to acquire required skills, capabilities
and technologies and as appropriate seek partners and form alliances.”

b.) “Support companies with a mentoring program that replaces and
extends the unofficial system that used to exist with Utilities”

c.) “Promote an Industry-wide move to an Innovation Culture by
promoting a TIM (Total
Innovation Management) Culture.”

d.) “Promote the development of Innovative products and services by
overcoming the industry critical mass problems through networks,
alliances and clusters.”

“Innovation and Industry The SME standpoint”
http://www.industry.gov.au/archive/summit/reference/submissions/73-JealWroe.pdf

e.) “Strategic linkages between organisations with complementary
skills and competencies have been identified as a critical factor in
successful innovation systems. The vital networks required are those
to do with accessing leading edge design and research skills and
equipment, as well as venture capital, and export & domestic
marketing. These networks facilitate both the generation of new ideas
and their advancement to market.”

“FOSTERING INNOVATION AND GROWTH”
://www.google.com.au/search?q=cache:VzTShCB6l3UC:www.newcastle.ieaust.org.au/uploads/POLICY%2520POSITION%2520-%2520Innovation%2520and%2520growth.doc+SME+innovation&hl=en&ie=UTF-8

The article we have mentioned earlier shows the following programs
that could help innovation in Australia.

f.) “support for R&D and innovation”
g.) “export assistance and market development”
h.) “assistance to SMEs” 
i.) “venture capital” 
j.) “education and training” 
k.) “provision of infrastructure” 
l.) “business taxation reform.”

“Cultivating Innovation”
http://www.aph.gov.au/library/INTGUIDE/sci/innovation.htm 

I have found the following websites detailing some programs for
innovation in Australian SMEs.

SME Policies
http://www.actetsme.org/aust/auspol.html

SME Development
http://www.dcita.gov.au/Collection/CollectionPage/0,,0_1-2_11-3_488-SUBJECT_ID,00.html

Department of Industry, Tourism and Resources - Programs
http://www.industry.gov.au/content/programs.cfm 

BITS program
http://www.dcita.gov.au/Article/0,,0_1-2_11-4_106000,00.html

Advanced Network Programs
http://www.dcita.gov.au/Article/0,,0_1-2_11-4_15253,00.html

ICT Centre of Excellence
http://www.dcita.gov.au/Article/0,,0_1-2_11-4_111178,00.html

Search terms used using Google Australia (://www.google.com.au):
SME innovation importance +IT
                   
I hope these links would help you in your research. Before rating this
answer, please ask for a clarification if you have a question or if
you would need further information.
                   
Thanks for visiting us.                    
                   
Regards,                    
Easterangel-ga                    
Google Answers Researcher

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Request for Answer Clarification by grover01-ga on 21 May 2003 22:27 PDT

I'm having intermittent problems with one of the links (And of course
I haven't saved and referenced it yet when it did work)
Is there a more direct link, or a way to make google refresh the
cache?
“FOSTERING INNOVATION AND GROWTH” 
://www.google.com.au/search?q=cache:VzTShCB6l3UC:www.newcastle.ieaust.org.au/uploads/POLICY%2520POSITION%2520-%2520Innovation%2520and%2520growth.doc+SME+innovation&hl=en&ie=UTF-8

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Clarification of Answer by easterangel-ga on 21 May 2003 23:48 PDT

Hi grover01-ga! 

Whenever us researchers resort to givng you links to the google cache
version of a web page, it usually means that it cannot be found in the
original website anymore as in this case. I have also tried it and
finding it using the same keywords and some variations but
unfortunately cannot do so anymore. Google might have already removed
the cache version as well.

Since us Google Answers researchers are independent contractors we
have no control over this matter. However, in order to assist you, I
will email them regarding this to see what they can do to help.

In order to somewhat make up for this here are some more articles
about SME innovation in Australia.

"Innovation and Growth"
://www.google.com.au/search?q=cache:pL64hz28JdMJ:www.ieaust.org.au/policy/res/downloads/policies/innovation%2520and%2520growth.doc+SME+innovation+importance+%2BIT&hl=en&ie=UTF-8

"PUBLICLY FUNDED SCIENCE AND TECHNOLOGY"
http://www.acci.asn.au/text_files/issues_papers/Industry_Policy/IP07.pdf

Thanks for your patience.

Best Regards,
Easterangel-ga

I have not gone through the entire answer and links yet(It is late),
but the information appears to be exactly what I wanted.
A broard list of resources linking the importance of innovation with
other small business issues such as business networks.
I do have a question for the researcher though, If I am to use this to
assist in my literature review and thesis, do I credit the references,
or does the researcher wish to be credited with partial research?

grover01 -

Kind of unfortunate, really, that you could not receive the full
benefit of my research - I've put a good number of hours into this. 
Only written up a little bit of it, though - so, for your benefit, at
the very least, here it is...

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Importance of Innovation to SMEs
****************************

The concept that innovation is a critical aspect of SME development
and success has more or less become a tenet of economic theory.  For
example, the OECD – the Organization for Economic Cooperation and
Development – states –

“RECOGNISING that globalisation, the acceleration of technological
change and innovation create opportunities for SMEs…”

…and…

“RECOGNISING the vital contribution of innovation to SME
competitiveness, the central role played by SMEs in national
innovation systems, and the importance of improved access to
information, financing and networking in facilitating the innovation
process”

http://www.oecd.org/EN/document/0,,EN-document-0-nodirectorate-no-20-1360-0,00.html

Further, in the OECD document the organization comments on how
governments may be able to assist SMEs in managing innovation –

“SMEs' ability to manage innovation (can) be improved by:
+ facilitating the hiring and training of qualified personnel
+ diffusing an innovation culture
+disseminating technological and market information and providing
related assistance (e.g. through improvements in relevant labour
market mechanisms, and linkages between enterprises and education
systems, and between industry and public and university research)”

The OECD also proposes that governments can intervene to ease
financial constraints on SMEs:

”Financial barriers to innovation in SMEs be reduced by:
i)	facilitating the development of market mechanisms for equity
financing, and related services, especially for innovative start-ups;
ii)	promoting risk-sharing programmes and measures, including
financial support and tax incentives to R&D and innovation;
iii)	supporting initiatives which facilitate "partnerships for
innovation" between entrepreneurs, public agencies and financiers.”

The OECD has also published something called the “Bologna Process” – a
process whose focus is bringing and fostering innovation among SMEs. 
The document describing this process can be viewed at –

http://www.insme.info/docs/TheBolognaProcess/PME13e.pdf

This document goes so far as to suggest that – “The ability of most
SMEs to survive, grow and generate new high quality jobs increasingly
depends on their capacity to put innovation at the core of their
business strategy in order to harness benefits from technological
changes and the globalization of markets for products and resources.”

The International Federation of Inventors’ Association (IFIA) and the
World Intellectual Property Organization met in Buenos Aires in
September of 2000, and published a paper entitled “Small and
Medium-Sized enterprises (smeS)
innovation and intellectual property” – the paper is available at – 

www.wipo.org/innovation/en/meetings/2000/
ifia_bue/doc/wipo_ifia_bue_00_6.doc
  
It is an interesting addition to the body of research you should read
through – among other things, the paper answers the following
questions:

+ “What are the challenges and opportunities that globalization raises
for SMEs as they are faced with pressures to reduce production costs,
increase productivity, and become more knowledge intensive?”
+ “What is known about the ways in which different types of SMEs
innovate, and which strategies can SMEs adopt in order to enhance
their competitiveness in the global market?”
For example, the following suggests that innovation is on the rise
among SMEs while it is actually declining among large companies –

“…recent evidence suggests that SMEs play an important role in R&D
activity.  Investment in innovative activities seems to be on the rise
in SMEs.  The National Science Foundation (1999), shows that total
expenditures for industrial R&D by SMEs has increased by almost three
times between 1985 and 1995 in the United States, while in the largest
firms, the increase has been only about 20%.  The National Science
Foundation also found an increase in the R&D sales ratio from 3.4% in
1985 to 3.9 in 1995 for SMEs, whereas the R&D sales ratios of the
largest corporations fell from 3.5% to 3.1%.”

The paper presents a lot more relevant and interesting data.

Service Recommended for Provision by Governments
************************************************

+ business incubation
+ networking
+ IP protection (patents, trademarks, copyright protection)
+ academic research -> spin-offs


Some Challenges - Need for Business Support Systems
****************************************************

- financials
- operations
- finding partners/customers
- expert advice - legal, accounting etc.


Additional Links:

Government sponsored intellectual property help for SMEs
http://www.ipaccess.gov.au/topic/index.phtml/id/6

ACTET SME – Australia
http://www.actetsme.org/aust/auspol.html


Search Strategy:

innovation AND (sme OR "small to medium") AND (business OR enterprise)

Excellent answer, EasterAngel.  *And* you assisted the customer in a
timely fashion.  Well done!

Nicely done, EasterAngel!  It's always good to see our customers
helped thoroughly *and* quickly.  You've done a fine job with both!

--Missy

Thanks grover01-ga for the kind words and to journalist-ga and
missy-ga for the wonderful comments! :)

In your question as whom to credit in your research, I think it would
depend greatly on the structure of your research.

The scenario here is that I was the one who assembled these references
but the details of the idea still came from them (the references).
Furthermore, I am only one part of the Google Answers service so if
you want to credit me (thanks in advance!) you might as well reference
Google Answers itself since they are the ones which made this service
possible.

I'm glad you enjoyed the service. 

Thanks! :)

Hello grover01

My suggestion is that you include the references to the web sites with
the rest of the citations in your bibliography (in case you have not
done this before, here is one of many web sites that explains how to
cite electronic sources http://www.unn.ac.uk/central/isd/cite/elec.htm
)
Then, you can mention in your acknowledgements that some of your
references were supplied by Google Answers, or, if you prefer, by
Researcher ID Easterangel on Google Answers (and include a link to GA
in case anyone wishes to follow up).