The Effects of Continuous Improvement and Innovation Management Practice on Small to Medium Enterprise (sme) Performance

This paper presents the results of a mail survey used to investigate the relationship between continuous improvement/innovation management practices and SME performance in Australia. Multi-item scales were developed and used to measure key components of continuous improvement and innovation management. Nine dimensions of SME performance were measured, for example, speed to market, success rate of new products, improved product innovation, reduction in waste, etc., Hypotheses, relating practice with performance outcomes, were developed and tested within a Continuous Improvement and Innovation Management (CIAIM) framework, using response data from 115 Australian SMEs from the manufacturing sector. A survey response rate of 21 per cent was obtained. The following results were obtained using multivariate analysis techniques: The CIAIM model was found to be a valid and reliable framework for measuring and predicting the relationship between continuous improvement/innovation management practice and SME performance. The most significant predictors of high SME performance were found to be: • The adoption of a continuous improvement and innovation management strategy. This was found to be a critical factor for high performing SMEs to achieve their strategic goals and objectives. • The use of core technologies and organizational objectives as a guide for evaluating new ideas and information as part of the continuous improvement and innovation management system. The paper concludes that a continuous improvement and innovation management strategy and system are significant predictors of SME performance. The implication for managers is that these practices are imperative in order to avoid SME failure. The findings are consistent with the literature.