Innovation activities and innovation performances of SMEs: The Korean electronic parts industry 1990–19951)

Summary This study empirically examines the antecedents and performance consequences of innovation activities of small‐ and medium‐sized enterprises (SMEs) based on a comparative static analysis of 123 SMEs in the Korean electronic parts industry. Prior innovation capability, the dominant functional career of the CEO, and the centralization and integration of the organizational structure during the t1 period (1990–1992) are found to have a positive impact on innovation activities during the t2 period (1993–1995), including research and development (R&D) intensity, technical manpower ratio, and the number of collaborative R&D projects. Innovation activities during the t2 period, in turn, increase the innovation performances during the same period, such as the number of patents, number of new products, and gain in labor productivity. This study also finds that the negative interaction of the centralization of organizational structure during the t1 period and the innovation activities during the t2 period affects innovation performances during the t2 period. Finally, this study discusses several theoretical and practical implications concerning the development of innovation capabilities in advanced latecomer SMEs based on the results. Future research directions are also suggested.