Assessing the Innovative Potential of Small and Medium Sized Enterprises: A Working Model of Innovation in Manufacturing

This paper reports on a programme of research considering the innovative potential of small and medium sized manufacturing enterprises (SMEs) in Industrial South Wales (UK). We consider and assess innovative potential as the configuration of management practices, capabilities, internal and external links facilitating the generation and appropriation of ideas. In the project we are interested in whether current trends in large firm manufacturing including an emphasis on innovations in product and process technologies and the role of employees and external institutions in problem solving and knowledge creation (Cooke and Morgan, 1998) is consistent with the experiences of managers in manufacturing SMEs. To date, studies considering the notion of ‘learning factories’ (Leonard-Barton, 1992; Fruin, 1992; Womack et al 1990; Kenney and Florida, 1993; Delbridge et al, 1998) and Japanese manufacturing principles (Oliver and Wilkinson, 1992; Elger and Smith, 1994) have primarily focused on multinational enterprises in the automotive and consumer electronics sectors. Some have advocated ‘lean’ in all circumstances (for example, Womack et al, 1990) while others offer a more reflective perspective arguing that adoption is mediated by factors such as local institutional context and strategic choice (Abo, 1994).