Understanding innovation in small and medium-sized enterprises: a process manifest

This paper proposes new directions in researching innovation in small and medium sized enterprises (SMEs) based on a process perspective. We proceed by (a) reviewing advances in mainstream innovation research, (b) considering the nature of studies of innovation in SMEs, and (c) outlining new directions that take into consideration the conceptual arguments illustrated in the previous sections. We propose that our current level of understanding is restricted due to the theoretical and methodological biases that have informed existing research. A better understanding is more likely to be achieved by rejecting normative-variance approaches and assessing innovation in the context of strategic conduct within institutional processes and structures. This should contribute to a better appreciation of innovation in SMEs by focusing on the process of change. (c) 2004 Elsevier Ltd. All rights reserved.