Successful Patterns of Internal SME Characteristics Leading to High Overall Innovation Performance

Abstract

Small and medium‐sized enterprises (SMEs) struggle with the paradox of developing new products and technologies on the one hand and minimizing costs on the other. These SMEs must be innovative to survive and grow. However, compared to large firms, SMEs have several problems in their innovation process, which negatively influence their overall innovation performance. This research explores successful patterns of internal SME characteristics that lead to high overall innovation performance. Cluster analyses were conducted to find patterns in the internal characteristics of SMEs with high overall innovation performance. We find that companies that focus on incremental innovation and that achieve high overall innovation performance indeed share a pattern in their internal organization, when controlling for innovation type. The paper adds to the current body of knowledge by comparing high‐ and low‐performing companies based on competence differences. Because real‐life organizations consist of multiple organizational characteristics, we also contribute to management practice by simultaneously addressing multiple organizational characteristics for the successful organization of innovation.