Innovation and Change Assignment Example | Topics and Well Written Essays - 3500 words

Innovation and Change - Assignment Example 7) and he argued that entrepreneurs are those who perform and carry out new combinations by finding and taking opportunities to be seized to create new products or service and to establish a new marketable contribution to the economy (McDaniel, 2002, p. 57). Innovation is one of the most vital constituents in advancing living standard and wealth creation. Innovation may occur from different guises, but the roles played by both large scale and small to medium sized enterprises in creating innovation and translating the same to useful needs and wants to be met by customers in the market are undeniably critical. Since Schumpeter argued that entrepreneur is an innovator in 1950s, many researchers investigated the relationship between innovation and performance and examined whether small to medium or large scale enterprises are better at innovating than the other (Gronum, Verreynne and Kastelle, 2012, p. 257). The importance of Small and Medium sized enterprises (SMEs) as drivers for econ omic development and for improved social wellbeing has been increasingly acknowledged. Moreover, innovation capacity is a critical requirement for the survival of SMEs (Wolf, Kaudela-Baum, Meissner, 2011, p. 242) mainly because better entrepreneurs are those who are good at innovating and therefore they are found to be successful. This piece of research paper investigates the argument that small to medium sized enterprises are better at innovating than large scale businesses and examines how successful are SMEs in innovating their goods or services. In order to analyze and critically evaluate the argument, this paper explains the meaning and conceptual framework of SMEs, addresses their role in the economy and explains why they are considered as important in terms of its contribution to innovation. Small and medium sized Enterprises (SMEs) Small and medium sized enterprises (SMEs) constitute the vast majority of all businesses in almost all the countries and they play a very central role in the economy. SMEs are the major sources of entrepreneurial skills, innovation and employment that in turn help the economy grow further. Analoui and Karami (2003, p. 25) defined SMEs as one that has only a small share of its concerned market and is managed in a personalized way by its owner or part-owner, but not through a medium of an elaborate management system. SMEs are not sufficiently large to get access to the capital market for publically issuing of securities. Researchers used different constructs such as annual sales, number of employees, value added, value of assets, annual profits etc to define and explain SMEs. Out of these constructs, number of employees and annual sales are most often used to delimit the category of SMEs. For most researchers, a small to medium sized firm is one that employs no more than 250 persons and is having annual sales of not more than ?50 million (Analoui and Karami, 2003, p. 26). According to OECD, SMEs are non-subsidiary and independ ent firms that employ less than a given number of people. The most frequent upper