Managing innovation for growth in high technology small firms

This paper studies ways to support sustainable growth in high technology small firms by managing innovation. The paper examines technology based and knowledge intensive business service firms (KIBS) and their innovation management in Finland. The goal is to find at least one meaningful innovation process for a small KIBS firm that takes growth into consideration. In the paper incremental, radical, disruptive, open and systemic innovation are seen from small KIBS firm perspective a model that combines these types of innovation is presented. Two cases of small technology based small KIBS firms are also selected to closer examination. Growth, knowledge creation and innovation in small KIBS firms Growth can be seen in many ways in small firms. It can be seen as intention to grow or potential to grow. It may also be growth in competitiveness, effectiveness, turnover, profit, personnel, partners and networks, knowledge or innovativeness. In this paper growth through creation and commercialisation of new innovative services in KIBS is in focus. There are growth models for firms (like Greiner 1972, Churchill and Lewis1983) but they are not studied in this paper as such. In knowledge based economy competitiveness of firms is strongly based on innovation (Tidd et al. 2005). According to innovation management theories a systemic approach in management of innovation is needed (Rothwell 1992). Development and learning should be strategy based because it accelerates them. Many KIBS act in turbulent environments so strategy must have rather simple rules so that decisions can be done fast. Content of services is most important but selection of technologies and market demand must support the content and business models and service concepts. In global knowledge based economy there is a transition from products to services and competition is based more on business concepts and models than on technology, products and services. While large firms focus to their core competencies and processes they outsource others than core processes including research and development and even the whole innovation chain or parts of it. Outsourcing of r&d is expanding to open innovation where new ideas are searched outside the organisations and also ways to commercialise ideas are looked outside the organisation as well. Global economy requires local and global presence simultaneously, knowledge intensity is increasing and new technologies enable novel processes. Value chains are breaking so that research is done on favourable regions and production is mostly moving and done close to large markets. Change is happening with accelerated speed in operating environment of firms and therefore also innovativeness is seen as a central source for competitiveness in firms.