Managing innovation in new product development: reviewing the performance of small and medium-sized enterprises

This paper reviews some aspects of the performance of small and medium-sized enterprises (SMEs) in responding to innovation and technological change when undertaking new product development. Focusing on the management of technology, it will consider the role of interaction and collective learning in building firm competencies. Through the development of new or existing technologies, firms aim to improve quality and cost-efficiency and to out-innovate their rivals. This is far from straightforward. Innovation is a complex process shaped not only by the firm's internal environment, but also by the interactions that occur between the firm and the many different actors and institutions that make up its external environment. Many SMEs appreciate the value of these interactions in promoting innovation. However, for those involved in innovative new product development they also bring with them associated risks such as, for example, a lower proportion of return on their technologies brought about by imitation by their rivals.