Research has shown that small and medium sized enterprises (SMEs) play an important role in the economic development of countries worldwide. However, in order for SMEs to survive for more than a few years in markets where there are large competitors, they must nullify their size disadvantages either by forming alliances with similar firms to increase the rate of market penetration and reduce financial risk, or by utilising technology to overcome diseconomies of scale and to produce innovations which differentiate themselves significantly from larger competitors. Because of SMEs' limited resources and relative inability to absorb the costs and risks associated with in-house technology development, they must often utilise the process of technology transfer to take advantage of the benefits gained by technology and innovation. Considering that SMEs have the potential to contribute positively to a country's economic development and that an SME's ability to innovate has an impact on its ability to survive in the long run, it is important to identify the primary obstacles they face with regard to new technology development and acquisition and to create tools and policies designed to help them overcome these specific challenges. This paper takes a first step in accomplishing this objective by identifying four primary challenges faced by SMEs with regard to technology development and acquisition, identifying potential strategies which can be used to overcome the aforementioned challenges and presenting the results of an exploratory study designed to shed some empirical light on the primary challenges faced by SMEs with regard to technology development and acquisition.
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Jones et al. (2002) studied this question.