When innovation is necessary but not sufficient

Resounding support for the pursuit of innovation has been observed in a series of action research initiatives with manufacturing sector SME’s and some Australian government departments over a three year period. But the need for efficient underlying operations and interactions with a globalized market are also noted. Multi-faceted innovation initiatives have been observed in the context of a dynamic operating environment that requires a balanced response including developing unique value propositions, achieving globally competitive operational performance and effective market engagement to extract full value from an innovation. It is observed that different factor conditions influence each of these imperatives. Product innovation is seen as primarily linking value propositions with markets. Process innovation is seen as primarily linking value propositions with operational competitiveness and organisational innovation is seen as linking operational competitiveness with markets. It is suggested that the absorptive capacity of small firms may limit the extent to which they may pursue these initiatives, leading to incremental innovation being the norm