New Horizons in the Economics of Innovation series
Edited by Meine Pieter van Dijk and Henry Sandee
Chapter 1: Innovation and Small Enterprise Development in Developing Countries
Chapter 1 15/3/02 8:47 am Page 1 1. Innovation and small enterprise development in developing countries Meine Pieter van Dijk and Henry Sandee Innovation is crucial for small enterprises to become and remain competitive in a global economy. It contributes to the process of industrialization and economic development. It is essentially a strategy to stay on board and accommodate changes in the behaviour of technology buyers. An innovation in a small enterprise in a developing country may not be new to the world, in the sense that the entrepreneurs produce new products that have not seen the light of day before. Rather the innovation adoption by small enterprises concerns imitation of production processes that have already been adopted elsewhere in the country or region. Although not new to the world it may be a novelty in the local milieu. Technological change implies four stages, starting with the introduction of the new technology. In a second stage local producers may try to imitate the technology. Subsequently efforts will be made to adapt the technology to the local circumstances. Finally innovation may take place when local producers manage to develop it further. Evidence will be presented on the factors that foster or inhibit innovation adoption by small enterprises in developing countries. Innovation is virtually synonymous with technological change, as it refers to the first practical use of a new, more productive, technique. A distinction can be made between product and process innovation. Process innovation concerns changes in the amount, combination, quality...
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