Shall we innovate? Empirical evidence on SMEs’ readiness for innovation

Purpose This study empirically investigates the impact of small and medium-sized enterprises’ (SMEs) readiness for innovation on both their propensity to innovate and the radicalness of their innovations. It further analyzes the distinct factors that influence each stage of the innovation process. Design/methodology/approach Survey data were collected from 600 manufacturing SMEs located in Québec, Canada. A sample selection regression was employed to analyze both stages of SMEs’ innovation decisions: first, the decision to innovate, and second, the degree of radicalness in the chosen innovation. Findings The results indicate that readiness variables, including managerial acquiescence, employee engagement, customer alignment and channel integration, significantly and positively influence the radicalness of SME innovations. However, only managerial acquiescence and employee engagement are positively associated with the likelihood of innovation. Marginal analysis demonstrates that fostering a culture of innovation enhances both the likelihood and radicalness of innovation. The findings also suggest that innovation requires increased risk-taking and that internal learning from past setbacks is essential. Originality/value Organizational readiness for innovation and its operationalization have received limited attention in the literature, especially for SMEs. We investigate how particularities of innovation readiness, such as resource availability, leadership support and organizational culture, influence SMEs’ innovation decisions. We clarify how each variable influences both the propensity and radicalness of innovation outcomes. We aim to enhance understanding of innovation processes and provide practical implications for managerial interventions. This can help promote innovation and reduce project failures.