Competence Barriers to Innovation: The case of German SMEs

Abstract

In a world with increased speed of business where companies are confronted with a dynamic environment, innovation plays a significant and decisive role for a companys competitiveness. However, innovation is a difficult process that involves risks that new products, services and technologies fail in gaining commercial success. Tidd et al. (2005) state that the opportunity of enhancing competitiveness also requires the management to have a contrasting set of knowledge and skills in comparison to what is required for an everyday business administration. Yet, even the innovation leader Germany and its strong Mittelstand face competence barriers to innovation. To efficiently innovate, these barriers have to be identified and overcome. This paper acknowledges the importance of innovation as a survival and growth imperative and investigates competence barriers to innovation and the consequences these barriers might result in. The competence barriers are explored in a sample of 45 German SMEs. The data was gathered through structured online questionnaires and analysed on the basis of regressions. Findings of the research identify that the most significant barriers are associated with management barriers which hinders companies to be innovative. Thus, these firms experience constraints to expand the business and encounter missed opportunities on financial returns. The results derived through this study highlight shortages of qualified personnel and in particular those lacking skills in innovation management as major competence barrier to innovation.

Keywords: Competence Barriers, Innovation, SME, Barriers to Innovation, Germany, Management.