Though not always fully recognised, Small to Medium Enterprises are the root of economic growth and job and wealth creation. They play a vital role in the global economy, strongly contributing to employment rates, innovation and growth. For instance, in the European Union they represent 99.8% of all enterprises, where they generate 60% of GDP, and provide 70% of employment in the private sector.
Yet, such a fundamental role is only possible if SMEs are able to continue reinventing themselves in order to innovate actively and remain relevant.
First suggested in 1931, the theory of innovation dynamics proposed by the founding father of innovation, Joseph Schumpeter, is more fitting now than it has ever been: the generation of new ideas and ways of doing is imperative for economic growth. All organisations, no matter how small or large, are facing challenges today that were unheard of only a generation ago.
Trade liberalisation and the movement of financial capital, paralleled by the information and communication technology development, have accelerated this trend exponentially.
This means that companies must decide wisely, fast and continuously how to invest and use an array of new methods and technologies while fighting to compete on a global stage.
According to Schumpeter, the only way to respond to this growing competitive business environment is to develop an economy based on innovations, knowledge and educated people. And nowhere is this fight to succeed more marked than in medium-sized companies.
Why then do medium enterprises still fail to innovate? We’ll see that next.
Learn more about the The 4 myths keeping medium enterprises from innovating here