Barriers to innovation in service SMEs: Evidence from Mexico

Purpose – Specific research related to the study of innovation barriers in service SMEs in the Latin American region is limited. This study thus investigates the effects that external environmental, financial and human barriers have on innovation activities, particularly, within the context of Mexican service SMEs. Design/methodology/approach – Three hypotheses were formulated and tested using structural equation modelling (SEM). Data were collected through an instrument that was developed based on relevant constructs adapted from the literature. The instrument was validated using Confirmatory Factor Analysis, Cronbach’s alpha test and Composite Reliability Index to ensure the reliability of the theoretical model. The instrument was distributed among service SMEs in the Aguascalientes state of Mexico, from were 308 valid responses were obtained. Findings – In general, the results indicate that all of the three barriers investigated (i.e. external environmental, financial and human) hinder innovation in service SMEs, with the external environmental barrier being the most significant of the three. Practical implications – The findings of this research can inform managers of service SMEs and policy makers when formulating and implementing strategies to reduce innovation barriers. Originality/value – Evidence suggests that specific research related to the study of innovation barriers in service SMEs in the Latin American region is limited. This paper fills this research gap by expanding the limited body of knowledge in this field and providing further evidence on this phenomenon. The study also enables the distinctive characteristics of innovation barriers to be understood within a particular context, expanding in this way the body of knowledge on this field.N/