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Innovation and Small Enterprises in the Third World

Innovation and Small Enterprises in the Third World

New Horizons in the Economics of Innovation series

Edited by Meine Pieter van Dijk and Henry Sandee

Innovation is crucial for small enterprises to become and remain competitive in the global economy. In this book, the authors have combined theoretical insights with comprehensive case studies on innovation among small-scale enterprises in developing countries, paying particular attention to technological change in clusters of small firms.

Chapter 10: Enhancing Innovation Capabilities in SME Clusters: Evidence from a Service Centre in Spain

Manuel Albaladejo

Subjects: development studies, development economics, economics and finance, development economics


Chapter 10 15/3/02 8:48 am Page 3 10. Enhancing innovation capabilities in SME clusters: evidence from a service centre in Spain Manuel Albaladejo Many have acknowledged that innovation is an essential factor in order to compete in the knowledge-driven economy. Under this scenario characterized by the fast development and the relative cheapness and accessibility of information technologies, economic actors have had to restructure their production systems towards greater decentralization and specialization in order to cope with new competitive pressures. Small- and medium-sized enterprises (SMEs) have faced even more constraints when competing in ‘high-street’ markets with innovative and quality products due to their lack of resources. In this context, research has shown that geographical proximity and institutional support could play a key role in helping SMEs to build up technological competence and innovation capabilities. This chapter looks at the case of the ‘Toy Valley’ cluster in the Spanish region of Alicante, and the AIJU (Toys Institute), a local service centre that provides technical services to toy-related SMEs. This case study provides a very interesting example of institutional support for SMEs who faced new competitive pressures through more innovative and quality conscious products. The main aim of this chapter is to draw up policy recommendations to enhance innovation capabilities of SME clusters in the developing world. The chapter has five sections. The next section sets up the conceptual debate presenting current issues concerning globalization, flexible specialization, clustering and provision of technical services. The third section introduces the case study: ‘Toy Valley’...

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