Innovative and Noninnovative Small Firms: Types and Characteristics

Abstract

This study addresses the proposition that the characteristics of innovative and noninnovative small firms have significant differences. It is based on a sample of 50 Texas manufacturers. Cluster analysis yielded five distinct groups—two innovative and three noninnovative. The two innovative groups were either young firms dubbed the “Young Turks,” or, established, managerially competent firms headed by newcomers called the “Blue Chips.” Among the three noninnovative groups, the “Silver Spoons” appeared to be surviving on past success; the “Striving Stoics” displayed continuing managerial effort but were led by executives who had been at the helm far longer than average; and the “Kismets” showed lesser competence and effort, were highly centralized, and were headed by executives tending more towards an external locus of control. Correlational analysis indicated a significant positive relationship between scanning and innovation. Challenges to the firm in the form of environmental dynamism and heterogeneity evoked positive innovatory responses but environmental hostility was a weak negative correlate inducing the firm to “pull in its horns.” Finally, an abundance of resources encouraged proactiveness.