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Abstract

MARK S. FREEL IS A LECTURER IN THE Centre for Entrepreneurship at the University of Aberdeen, Scotland. This paper seeks to understand the nature and extent of barriers to innovation within a sample of small manufacturing firms. After identifying from the literature four broad categories of constraint (finance, management and marketing, skilled labour, and information) it is found, inter alia, that:

* while the sample provides no evidence that innovators are more likely to apply for external finance (as a proxy for greater need), the data does suggest that, of those firms who had applied for external funds, innovators were less likely to have been successful than their less innovative peers. This latter finding is tempered by generally low levels of applications and application failures. However, perhaps of more concern, there remains a heavy reliance on short-term debt funding for innovation.

* improving in-house technical and marketing competencies are identified by the firms as key to improving their innovative activity rather than accessing external skills and increasing the number of internal 'experts' and in preferen-ce to managemenit, finanice and exporting skills.

* the study also signals the eiiployment of graduates as imnportan-t to innovation, although the nature of cause and effect is unclear.

* finally, the study suggests that the level of firm interaction with external agencies is disappointingly low and that the principal barriers to collaboration are "lack ol trust" and "inability to find suitable partner", Public policy may find such intangible 'barriers' somewhat intractable.

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Barriers to Product Innovation in Small Manufacturing Firms

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