Strategy and market management of new product development and incremental innovation: evidence from Italian SMEs

Abstract

The industrial structure of many European countries is dominated by small and medium enterprises (SMEs). Although SMEs consider the new product development (NPD) process fundamental for success in the global market, the level of formalisation of the innovation process is very low. Moreover, if we consider the SMEs operating in the mature sectors, such as automotive and machines tools, the situation is worrying. The aim of this paper is to analyse in-depth a sample of manufacturing SMEs located in a highly industrialised Italian region (Piedmont), the strategy used both for NPD and for incremental innovation. The latter may often occur, not so much as structured R&D activities but, respectively, thanks to: the involvement of the entrepreneur or managers; the improvements informally suggested by engineers or technicians engaged in the production process; proposals and initiatives coming from users. The methodology in this paper is a longitudinal study which provides a close-up view of the adoption of these non-structured innovation patterns. Although the SMEs located in this area are specialised rather than diversified in their technological competencies and product range, they lack of information about the financial facilities available to the innovation process and marketing capabilities. These generate two effects: the SMEs cannot cope with the R&D expenditures for new products; they cannot fully take advantage from their innovation process. This research aims to offer some useful considerations to the European policy makers and managers in managing NPD and innovation within SMEs.

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