The processes of innovation among rural manufacturing SMEs: externalities and beyond

Abstract

This study explored the processes of innovation among innovative rural manufacturing SMEs by using the narratives of the owner/mangers of case study firms and other actors involved in the innovation process. This was consistent with the ontology of critical realism that was selected which entailed the use of case study method as a tool for data collection. This study makes a number of incremental rather than radical contributions to innovation theory and our understanding of innovation among rural Manufacturing SMEs. The results of this study shows the importance of opinions of owner/managers in the measurement of innovation considering that the majority were either unaware of the need to register their innovation and the lack of support organizations in rural areas who can advice SMEs on the need for patents and the registration process. Regarding the characteristics of innovation in rural areas, the results showed that rural innovative SMEs are likely to be relatively strong in innovations where effects of scale are not yet important but where they can make use of their flexibility and proximity to market demand. The results of this study showed that SMEs received ideas for their innovations from various sources located both within and outside the case study area. The firms then used different approaches to develop their innovations including internalised design and externalised manufacturing, externalised design and internalised manufacturing, and internalised both design and manufacturing. Lastly, rurality did not appear to constrain the processes of innovation since SMEs had developed strategies that enabled them to adapt and adjust to their rural environment in order to remain innovative.