Research article

La innovación y el crecimiento de las PyMEs Argentinas:
una revisión de los factores clave

Resumen

Es factible reconocer los grandes esfuerzos presentes en la literatura para ilustrar la relación entre la estrategia y el crecimiento. Algo similar llega con la intensidad de la innovación y los tipos de innovación, tanto en relación con el crecimiento. Sin embargo, no es fácil encontrar los elementos que vinculan estos aspectos a través de un enfoque estratégico. Por otro lado, gran parte de los trabajos publicados se lleva a cabo sobre las grandes empresas, por lo que se hace necesario un enfoque de las PyME, y más específicamente de las PyMEs Argentinas. Además, la revisión de las investigaciones internacionales y locales sobre la innovación y el crecimiento de las PyME es realizada teniendo en cuenta las principales diferencias entre el desarrollo y las economías industrializadas. Los tres aspectos fundamentales que fueron analizados son: La aceptación y el crecimiento, la innovación como motor de crecimiento de las empresas y, por último, la innovación como base para la estrategia de la empresa. Con esto en mente, fueron alistados y relacionados las conclusiones específicas en la literatura y los sus respectivos conceptos. Más concretamente, el principal objetivo del presente trabajo es el de determinar los factores importantes para la PYME de la Argentina para el logro del crecimiento a través de una adecuada gestión de la innovación.

Innovation and growth in Argentinian SMEs:
A key factors review

Abstract

It is know the great efforts present in the literature to illustrate the relation between strategy and growth. Something similar arrives with the innovation intensity and innovation types, both related to growth. Nevertheless is not easy to find the elements that link these aspects through a strategic approach. On the other hand, much of literature written is done about the large companies, and a SME approach is necessary, especially to argentine SMEs. In this paper, a list of the key elements presents in literature is done. A review to the international and local researches about innovation and growth in SME is considerate, having in mind the main differences between developing and industrialized economies. Three fundamental aspects were analyzed: Acceptance and growth; Innovation as engine of firm’s growth and lastly Innovation as a basis for firm Strategy. With these in mind, specific conclusions in the literature were enlisted and the concepts were related. The main objective of the present work is determinate the factors that are important to the SME of Argentina to achieve growth via an adequate innovation management.

Introducción

Several studies exist, mostly empirical, that linkinnovation to business growth (Patterson M.L. 2003), (Howitt, P.,2007), (Trott, P., 2004). In addition, in today international context, innovation is widely recognized as the most important way conducting to firms, regions and countries to sustainable competitiveness. (Morel et al. 2007)

Furthermore, a large number of authors have worked on the ability of firms to innovate based on internal practices (Boly V, 2004), (Wang et al., 2008) or based in acquisition of technology through different means, among which stand the "technological outsourcing" the acquisition of companies, etc. On the other hand, (Berkhout, G. 2010), (Porter M.,1998) and several others have proposed an extensive literature about the analysis of  environment and competition and its economic relationship with the company's growth.From marketing discipline, we have great advances in the detection and even the generation of customer needs, as well as the elaboration of precise specifications for the products or services to satisfy they. (Kotler et al, 1999)

The definition of strategies to compete and grow has been deeply analyzed from the point of view of resources as those based on competition. (Porter M., 2008). In the vast majority of the works, an analysis of the business environment, whether the macro environment (Oxford U., 2007) or the immediate environment have been made. However, the analysis of both, environmental variables and company's capabilities are not convincingly related to the design of the strategy in terms of their interaction’s dynamic. Undoubtedly, analysis (Porter M.,1998)(Giget M., 2000) generates highly relevant recommendations, though not easy to link them in a concrete plan or project. This is even more complicated to do when we try to relate to the practices of innovation and research and development (R+D), although there has been significant progress in bringing strategic analysis to the field of marketing actions. (Kotler P. 2003), (Trott, P., 2004).

We therefore believe that, for the generation of growth strategies based on innovation, there is no adequate treatment, even more so in the case of SMEs, although they are often named as drivers of innovation in the markets. (OECD 2004). In the case of Argentinian SMEs the lacks of literature are even bigger. To resolve that, it is important to see in the local literature (Cristini & Bermúdez, 2004), (Gabriel Yoguel, 2000), (Bruera, 2011), (Bruera, 2011), etc.

Internationally, It is convenient to name some works that have made important progress in this sense such as the Blue Ocean Strategy, (Chan W et al, 2005) fit creations in strategy (Porter M. 1997) and those based on the skills tree (Giget, 2000). Also, (Morel et al, 2007) provides an example of innovation management in order to define an innovation strategy linked to growth.

SME Characterization

(Salles M., 2003)Big differences exist between the big companies and the SMEs, the last ones should not be considered as big companies "in small". The SME cannot benefit of big volumes of production, scale economies, etc, they should base their offer on the differentiation, much more than the big companies. Most of the SMEs, run in an environment of informality. (Meunier, 2007) the SMEs face highs degree of financial problems and the typical tools of strategic analysis are not pertinent. The SMEs should think before in surviving rather than grow. The fight is centered about the vulnerability factors.  It is better the SMEs don't face openly to the competition, but rather they look for a niche strategy. SMEs have a necessity of constantly contrast its strategic ambitions against its financial possibilities.

By (OECD 2004) SMEsis a very heterogeneous group. A subset of SMEs is dynamic, innovative, and growth-oriented. About 30-60% of SMEs in the manufacturing sector in the OECD can be characterized as innovative. Small manufacturing firms are almost as innovative as large firms. Additionally, SMEs also conduct a growing share of R&D. New technology-based firms (NTBFs), most of which are innovative SMEs, play a crucial role in radical innovation and the commercialization of R&D done in research laboratories. SMEs, however, are reported to face a number of impediments to their growth and survival including limited access to financing, limited market power, the lack of management skills, high share of intangible assets, deficient accounting track and insufficient assets.(Yoguel G., 2000) The scenario of business in that it operates an SME is conditioned by a group of factors, among those that stand out the regulatory frameworks, the rules and political macroeconomic, the industrial strategy and politics, the access to the markets, the degree of complexity of the productive network and the technological and organizational characteristics of the leaders companies in the sector. The capacity to overcome the restrictions depends, among other things, of the degree of endogenous development reached in its evolutionary path.

Acceptance and growth

Since the theory of strategic analysis the mission of a company, no matter their size or activity, should be accepted by customers and/or a group of stakeholders. This acceptance covers various aspects. Purchasing of the product or service is the most obvious and perhaps the most important. But we can´t leave out aspects others than the product itself,which are embedded in this validation, such as the extended product, services, fulfillment of standards and regulation, convenient management of suppliers, and more broadly therelationship between business and the firm’sgeneral environment. These mentioned aspects converge in the acceptance of the company and its offer, and permits achieve the mission’s goals. This condition is indeed necessary for the growth of the company.

The company interacts constantly with its environment. It makes it from their installation in the community until their disappearance, going through the day-to-day dynamics. However, many of these interactions can be considered “internals” in the sense that they don't transcend the company's frontiers or, if they make it, their consequences are weak or imperceptible. However, there are daily events in which the company interacts significantly with the environment in different ways. The company is being exposed to the environment, for example, in the launching to the market of a new product. It shows its product, it generates an opinion, the product it can be known, acquired, studied, etc by the competition. The main actor of this encounter is the client, because is to him that the product is aimed. 

The company is exposed to the environment by means of differentencounter instances: Situations where the restrictions of the environment or their consequences are confronted with the actions of the company. In front of an instance the company should act concretely to overcome them. The product is nothing more than a meeting point, at a given time between the company’s offer, exploiting the potential of the state of knowledge, and the demand of persons that have a need and they see a response to their dreams and desires (Giget, 2000).

Strategy determines a series of necessary activities to grow, to counteract and to overcome the restrictions of the environment (Meunier, 2007).Companies via its different functions must to carry out these activities and the environment, via its factors, generates these restrictions by the casual (or not) confluence of different circumstances. For example, a high inflation will make that the purchasing power of the client drops down.  This dynamics, in balance state, allows the normal operation of the company, without growth. According to (Porter M.,1998), competition continually works to drive down the rate of return on invested capital toward the competitive floor. The Innovation practices (Boly V, 2004) will act over the activities helping to overcome these constraints and therefore, carrying the company to the growth.

The growth arrives when the company possesses the necessary resources to increase its offer to the market and the offer is accepted. This way, the company has the necessary resources to make the necessary investments to grow (Competences, facilities, etc.). To do this, a firm must acts against the resilience of the environment (market) through manufacturing and managerial activities as leverage. Then, the environment rewards to the company with more cash resources. (Patterson M.L. 2003)

(Boly V, 2004)identifies four poles of profit in an innovative activity: Quality (Product, services and process),marketing positioning, styles of conception and finances (Costs, sale price). (Giget, 2000) shows the referenced dynamics as existence of a constant pressure from the market in the sense of the demand of new products: Better products, more ergonomics, more sustainable, easier to use, etc. That creates a powerful motivation that acts in favor to innovation and is called “Market Pull”. There is too a constant pressure of the knowledge is called “Technical push” in innovation theories.  A little part of the market tend to accept the new product quickly.The growth doesn’t arrive if, additionally to “market pull” and “technical push”, there isn’t an offer’s dynamic, reached by the creativity and innovation.

According to (Kotler P. 2003)it is not enough to be profitable. Companies must also grow. In fact, if you don’t grow, you won’t be profitable for long. Staying with the same customers, products, and markets is a recipe for disaster.

Innovation as engine of firm’s growth:

There is wide literature about the innovation process and their impact in the actual economy. It makes reference to the relationship between innovation and the growth of the company. (Boly V, 2004) points how must to be that the setting in successful march of a new product, service or process and notes the following aspects:  Success: Enterprise permanency, employment generation, gain, etc.Utilization by the clients and Generation of value: That allows being profitably, and also achieving other strategic goals. Differs total or partial with existent products

(Patterson M.L. 2003) outlines a strong relationship between innovation and company growth. Using a cycle model and starting from the proportion of the income that is reinvested in R+D, it outlines a mathematical relationship among them. This shows that the investment in R+D, under determined circumstances, generates a strong growth.  It points out as responsible for this growth to three factors: 

• The portion of the rent invested in innovation of products 

• Profitabilityof the new commercialized products

•The behavior of the rent in function of the time for a company in particular 

(Hughes A. 2001)For the growth based on the innovation in companies of the UK, the management abilities are more important than the financial factors. The innovation is a source of profitability. For (Boly V, 2004), the innovation process managed in an appropriate way, offers the opportunity to the company of consenting to markets of superior margin in which the competition is not properly organized and allows the access to the specialization markets.

(OECD 2004) Innovation is recognized as an essential component of the economic growth process, where it can be broadly defined as the development, deployment and economic utilization of new products, processes and services.

Innovation as a basis for firm Strategy:

(Chan W. et al, 2005)Outline a definition of a strategy to compete that is based on defining the characteristics aspects related to product and /or service, and the communication with the client, price, quality, etc. It is aimed to satisfy markets or unattended niches. The concept of "Value Innovation" is presented to refer to the creation of value for the client while that makes to the competition irrelevant. This way, value added is created for an unattended market, instead of fighting with the competition. This value innovation arrives when the companies are able to align product’s utility, price and costs.  This concept challenges the Cost/Value tradeoff.  A decomposition of the strategy in useful parts for the taking of decisions is also presented, allowing invest addressing a concrete strategy.

According to (Porter M. 1997) Strategy imply to make trade-offs, things that won't make to compete and implies to create "synergy" among the activities of the company. Rivals can quickly copy any market position, and competitive advantage is, at best, temporary. All the activities contribute and not only managerial ones. On the other hand, the efficiency means to make the things better than the competition, while the true competitive advantage drifts of making different activities or the same activities in a different way.  (Porter M.,1998)define value as the quantity that buyers are willing to pay for what the company offers them. (Meunier, 2007) Strategymust to express the direction where the leaders decide to go, meaning to define for each strategic segments a posturein four aspects: What to abandon; What to maintain, defend and consolidate, What develop, to improve and What to create.

(Mintzberg H.,2001)The strategy can be seen as a plan: Some sort of consciously intended course of action, a guideline (or set of guidelines) to deal with a situation.

Determination of critical factors

To determinate the critical factors, a series of analysis have been made in the sense of correspondence between the elements early defined and the concepts treated in the literature. The concepts that have been particularized to a specific country or region (Excepts Argentina or Latin America) were discarded. Some elements that have been descripted to developing economies and that have certain similarities the local environment are considered in a minor degree. It only is valid if these similarities are descripted in the literature. In the Table 1, the factors that are considerate as important in the literature are shown

Table 1: Factors of innovation, growth and its relationship

Results classification

To classify the founded results,four topicswere considerate: Environment circumstances, Enterprise activities and a division of this last: Innovation activities (Table 2). This classification was proposed by considering the possibility to act or not to act over the named aspects. Enterprise and Innovation activities are under the firm´s control. The environment circumstances and link factor are exogenous to the enterprise and consequently, these are out of its control. The last topic is related to the link factors between innovation and growth. These results are not ordered by importance but for frequency of apparition. This doesn´t imply that the more referred is the most critical. To know that, a model of the behavior of interaction between these aspects is necessary. A survey in the Argentinian SMEs must to be applied.  

Table 2: Classification of factors using control criteria

Conclusion

A bibliographic research about the relation among Strategy, Innovation and Growthwas done. This research was aimed particularly to the Argentinian SMEs, based in the international and local evidence in the literature. The available evidence of a huge heterogeneity, about developing countries and the relationship between innovation and growth makes this work hard and almost endless.Nevertheless, a set of common factors have been clarified and a classification have been proposed with the objective of formalize the study variables of the problem. Related to the argentinian problematic, the evidence about this variables is no abundant and it is no well treated in the sense of our research.

The present set of defined variables is hoped to be useful to determinate the cited relationship. The particular regulatory framework of Argentina, that is continually changing, present a remarkable opportunity to know better this relationship and allow to canalize the management actions.

The present study can´t be considered as definitive. Differences between enterprise types (software, manufacturing, services, etc.), target market (local market, exportation, etc.) were not considered. Neither the type of client (public or private) was discriminated.

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Técnica Administrativa
ISSN 1666-1680

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Vol.:11
Nro.:02
Buenos Aires, 15-04-2012

URL http://www.cyta.com.ar/ta1102/v11n2a1.htm