Financial Means’ Competencies and Innovation: Comparative Advantages between SMEs and Big Enterprises

Abstract

The interpretation of Schumpeter’s works (1935, 1939, 1974) leads to the formulation of two major assumptions. The first suggests that a positive relation between an innovation and the power of the monopoly prevails. The second supposes that big companies innovate more proportionally than small and medium-sized enterprises (SMEs) (the intensity of the research increases more than proportionally with size). This conjecture has been analysed in several empirical studies (Kamien and Schwartz, 1975, 1982; Baldwin and Scott, 1987; Scherer, 1992). These works brought answers, but they also show, as recalled by Le Bas (1991), that this question does not present either evident theoretical or empirical proof. According to Scherer (1992), an accepted result would be that big companies are more predisposed to innovate since they have greater means (financial, human, etc.), while the advantage of the small firm in the process of innovation is especially focused on the organizational level. This result led some authors to propose other research. Cohen (1995) notably suggests targeting their work to the concept of competence to study the explanatory factors of the innovating behaviour rather than to try to analyse a direct relation between size and innovation, as an important source of bias (Acs and Audretsch, 1990).