Innovation's Impact on SMES' Financial Performance through Voluntary Disclosed Information

25 Pages Posted: 12 Oct 2016 Last revised: 22 Jun 2017

See all articles by Francisco M. Somohano

Francisco M. Somohano

University of Cantabria - Faculty of Business & Economics

José López-Fernández

University of Cantabria

Francisco J. Martinez Garcia

University of Cantabria - Department of Economics

Date Written: April 5, 2016

Abstract

The purpose of this paper is to study the effect of innovation on Small and Middle-sized Enterprises’ performance in comparison with the effect of the industrial activity of the company. The economical measuring of performance was made by Cash Flow over Total Asset. As independent variables we used two indicators based on the information voluntarily disclosed by the companies, one to measure innovation and the other to catalogue the activity differently than the industrial classifications. The sample included a total of 920 companies from the Spanish automobile components industry (81% SMEs and 19% large companies). The results show that 2008 crisis is the factor with the greatest impact on the results; the companies that innovate the least experience a lower cash flow on assets, companies with a medium level of innovation, mainly Middle-Sized firms, have best results; moreover, the efficiency of innovation is reduced beyond a threshold that marks the boundary between the Structure–Conduct–Performance paradigm and the Resource–Based Approach.

Keywords: Innovation, Industry, Cash Flow, Automobile, Disclosure

JEL Classification: L25, O31, O32

Suggested Citation

Somohano, Francisco M. and López-Fernández, José and Martinez Garcia, Francisco J., Innovation's Impact on SMES' Financial Performance through Voluntary Disclosed Information (April 5, 2016). Available at SSRN: https://ssrn.com/abstract=2851076 or http://dx.doi.org/10.2139/ssrn.2851076

Francisco M. Somohano (Contact Author)

University of Cantabria - Faculty of Business & Economics ( email )

Santander 39005
Spain

José López-Fernández

University of Cantabria ( email )

Santander 39005
Spain

Francisco J. Martinez Garcia

University of Cantabria - Department of Economics ( email )

Av. Los Castros s/n
Santander 39005, Cantabria 39005
Spain

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