The outcomes of cross-industry innovation for small and medium sized enterprises

Abstract

There is a lack of research on how cross-industry innovation (CII) affects growth processes in small and medium-sized enterprises (SMEs), and whether it is worthwhile for SMEs to attempt CII. The current study addresses this gap by examining how CII at different market entry stages leads to various modes of growth in SMEs. Based on a survey data from 1187 Norwegian SMEs, we demonstrate a clear positive connection between CII and growth, particularly organic and acquired growth, and CII and cost reductions. Our findings highlight the importance of innovation across industry lines and show that CII is a favorable option for SMEs. This study makes several contributions. First, it adds to the growth literature by stepping away from a unidimensional view of growth. Second, it extends the existing CII and SME literature by addressing CII outcomes for SMEs. Third, the findings have important implications for business practitioners and policy makers. In this regard, we recommend that SMEs explore and exploit CII opportunities whenever possible to achieve greater versatility and diversity. The clear connection between CII and SMEs’ growth also emphasizes the need for policymakers to further develop the policies facilitating proactive CII and connecting SMEs from different industries.