Community Research and Development Information Service - CORDIS



Project ID: 327405
Funded under: FP7-PEOPLE
Country: United Kingdom

The link between competitiveness and innovation

Businesses can become more efficient and profitable if they have a better understanding of the dynamics between competitiveness and innovation, including the role of management and staff. A recent EU-funded project has shed light on this important topic.
The link between competitiveness and innovation
Competitiveness and innovation have a complex relationship, particularly in the context of globalisation. Understanding the dynamics between competitiveness and innovation can help SMEs in Europe flourish.

The EU-funded SMES COMPETITIVENESS (Key factors for the SMEs competitiveness in the context of globalisation) project investigated this important relationship. It sought to articulate a new framework that links key theories of firm competitiveness and innovation.

Building such a framework involved identifying the distinction between a firm’s internal and external factors, as well as the role of entrepreneurial or managerial characteristics. It also involved a new division of a firm’s innovation-related factors such as product/process innovations, advanced technology, IT standards, trademarks, patents, internationalisation, networking, and marketing strategies.

Among its findings, the project outlined the changing configuration of innovations and how some of a firm’s basic factors (structure, staff, marketing, technology etc.) shape innovation and performance. Managers can exploit this information to promote firm sustainability and innovation, including in times of crisis.

In a study of 500 businesses, the project also found that product innovations mediate performance in manufacturing SMEs. More specifically, it found that innovations play a mediating role between process innovations, other external and internal factors, and performance. The findings revealed that product innovations had a direct result on performance, whereas process innovations had a significant but indirect result on performance.

In one particular research avenue, the project team looked at the critical role of staff related innovations in tourism service enterprises. Examining hotels in Bulgaria and the UK, it found that staff-related innovations were the ones that impact performance directly, while other types of innovations contribute to hotel performance indirectly.

Overall the results can support entrepreneurs and SME policymakers by highlighting beneficial policies and measures that businesses can adopt. The findings will also help make SMEs more competitive in a number of fields.

Related information


Competitiveness, SMES COMPETITIVENESS, innovation, SME, manufacturing, hotels
Record Number: 188744 / Last updated on: 2016-10-27
Domain: Industrial Technologies