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INTERNATIONAL JOURNAL OF SCIENTIFIC & TECHNOLOGY RESEARCH VOLUME 6, ISSUE 10, OCTOBER 2017 ISSN 2277-8616
Improve The Performance Of SMES Through
Innovation Strategies In Developing Countries
Arnis Budi Susanto, Wasito
Abstract: Innovation strategy is a key driver for the performance of small and medium enterprises (SMEs) by applying a culture of innovation in a
strategic and structured way. To improve the performance of SMEs innovation strategies are aligned and closely related to the innovation process
undertaken by SMEs in various fields
Keywords: Innovation, Strategy, Performance, SME.
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1 INTRODUCTION
For decades, small and medium enterprises (SMEs) of
manufacturing contribute to the global economy including
Indonesia (Kuswantoro et al, 2012; Hafeez et al., 20012;
Jaiyeoba, 2011; Edwards, 2005) .SME is the backbone of
modern economic life and is considered a as an engine of
economic growth and employment (Marsuki, 2006; Hajipour
and Ghanavati, 2012; Hafeez et al., 2012). SMEs play an
important role in the system of business development and
advancement in the state economy (Man, 2009; Idar and
Mahmood, 2011; Opeda et al. 2011; Hajipour and Ghanavati,
2012) SMEs have become important as sources of
employment and maximizing the efficiency of resource
allocation material and also acts as a supplier of goods and
services for large companies. Empirical studies show that
small and medium enterprises have problems and constraints
in improving their performance. According to Hinson &
Mahmoud (2011), SMEs have difficulty adapting to market
change strategies and competing with big companies. SMEs
This can happen when the SMEs move not on the basis of
production capability alone, but also directed by the dynamics
of the market going. Companies not only produce, but pay
attention to the interests and needs of consumers. This kind of
practice is popular with market oriented or market-oriented
companies. Another obstacle faced by SMEs is related to
corporate innovation. Innovation is one of the basic
instruments of new growth strategies to enter the market, to
increase existing market share and provide companies to be
competitive. (Gunday et al., 2009). Innovation can be a
potential solution for SMEs (Hafeez et al., 2012). One way to
develop and improve competitive advantage and improve
performance is through resource utilization and enhancing
innovation for SMEs (Hilmi and Ramayah, 2008). Innovative
methods applied can enable SMEs to compete and survive in
a competitive global environment. (Kiran et al., 2012). Gunday
et al, (2009) identified an innovation relationship with firm
performance in the manufacturing industry in Turky. The
finding that the innovations made in the manufacturing
companies has a significant positive relationship on
