The Innovation Activity in a Stagnating County of Hungary

Despite recent theoretical and empirical developments, our knowledge about innovation is still limited. The major aim of this study is twofold: to examine innovation activities carried out in a region (county) of Hungary and to devote attention to the innovation characteristics of small and micro size businesses. The Oslo Manual-based survey technique was successfully adopted for the purposes of this investigation. Highly innovative small businesses employing highly educated workforce, producing mainly for local (domestic) markets were found to exist even in a lagging region of a developing country. However, typical innovation activity consists in a cheap, minor change of the product that does not increase the export propensity of the business. In addition to an insignificant influence of foreign ownership, low level of co-operation, limited use of outside help (government support) and lack of R&D activity are found to be the most important obstacles to further development and diffusion of innovation. The research method, as well as the lessons of this study, could be valuable for other regions and other less advanced countries