Explaining innovative efforts of SME's : an exploratory survey among SMEs in the mechanical and electrical engineering sector in The Netherlands

Innovations are among the most important means through which small and medium sized enterprises contribute to increased employment, economic growth and economic dynamics. A lot of research has been carried out to determine which factors enhance innovative efforts of SMEs. This study uses a regression-based methodology to examine the importance of each factor, controlling for the other factors. The study is based on data collected through telephone interviews with managers of Dutch SMEs in the metal-electro-sector. In the analyses innovative efforts are used as the dependent variable. Out of 14 potentially independent variables, three appear to contribute significantly to innovative efforts: using innovation subsidies, having links with knowledge centres, and the percentage of turnover invested in R&D. This article suggests that innovativeness is the result of a deliberately chosen and pursued policy. If governmental and or sectoral institutions want to stimulate SMEs to become and remain innovative, they should encourage these companies to implement an innovation directed policy. Without such a policy, SMEs seem unable to digest successfully stimulating measures and subsidy schemes.