Efficacy of innovation diagnostic tools in identifying models of sustainable innovation in manufacturing SME

Drawing upon the available literature, the paper examines the application of a diagnostic assessment tool for examining innovation management practice in small firms. Four case studies of SME manufacturing firms in Australia are examined with reference to their performance on the diagnostic assessment, as well as the national context within which such firms exist. The paper identifies the primary drivers of an emerging model of sustainable innovation, and seeks to explain the impact of external government support for innovation, plus the importance of internal management systems. The findings highlight the critical importance of the entrepreneur within SME manufacturing firms who serve as a key 'distinctive competency' within the company. As a learning system, the SME, via its entrepreneur(s) and key staff, is continuously in communication with leading customers, key suppliers and third-party advisors. The need to offer value to customers and thereby extract higher than average profits from appropriate pricing is also highlighted. This desire for continuous improvement, differentiation and value adding, emerges as a key driver for innovation within these firms. Such behaviour is consistent with the notion of a technology cycle model. Perceived gaps in the national innovation system are also highlighted, with particular concerns expressed over access for small firms to early stage seed capital for R&D projects