Innovation's Impact on SMES' Financial Performance through Voluntary Disclosed Information
25 Pages Posted: 12 Oct 2016 Last revised: 22 Jun 2017
Date Written: April 5, 2016
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: Suggested Citation