Abstract
SMEs role in job creation, innovation and enabling economic stability has been established at national, regional, and global levels, hence their growth and survival has implications for the firms and wider society. SMEs operate in dynamic environment where they must grapple with uncertainty and maximise their capabilities to respond to changing market needs.
From academic and practitioner perspectives, growth is viewed as the outcome of innovation activities which is usually evidenced through R&D investment. However, this paper examined 86 SMEs from different sectors in the Northwest of England who achieved growth between 2016 and 2019 to understand growth indicators based on internal R&D capabilities. Surprisingly, only 31% of them invested in R&D which contradicts the notion of SME growth being influenced by R&D investment. This highlights a gap in the perception that a lack of formal innovation through R&D investment hinders growth as all 86 SMEs achieved growth. This begs the questions as to how SMEs could achieve growth without formal innovation process through R&D investment. It also raises the question of the type of innovation activities the 69% of SMEs engaged in to achieve growth as innovation activities may not lead to growth in every case.
So, this paper contributes to the research area by adopting a mixed-method approach to investigate SME innovation activities and the R&D investment. This
provided a comprehensive understanding of SME growth, which is largely ignored in extant literature. Most researchers have employed only quantitative research methodology, but the been criticised for its simplistic perspective of measuring growth by seeking to quantify variable that may be qualitative in nature. Consequently, important factors affecting SME growth are missed.
This paper overcomes that challenge by demonstrating the need for qualitative approaches to complement existing quantitative studies to provide a balanced view of firm growth (Gilman & Salder, 2021). A mixed-method approach helps to discover evidence of hidden innovation in SMEs while drawing on the resource-based view and composition theories of resources for application to 86 SMEs across 13 sectors. This research addresses a gap in the understanding of SME growth by combining qualitative and quantitative approaches to generate new insights.