Innovation and Entrepreneurship - New innovations as source for competitiveness in Finnish SMEs

Paper analyses the role of innovation in small Finnish entrepreneurial firms. The study is based on a questionnaire survey and semi-structured interviews carried out late 2005. In the light of company cases an innovation has been crucial factor for existence of business at the first instance. According to the survey results, identification of market niche and customer needs turns out to be the most important source for innovation among both small and larger companies. Increase in profitability and competitiveness emerge as the most beneficial impacts of innovation in all companies but also new contacts and co-operation arisen in the process of innovative activity are highly valued, especially in micro firms. Despite of importance of an innovation, in small entrepreneurial firms emerge also number of challenges hampering commercialisation of a novel idea. These range from obstacles pioneer company encounters in gaining market credibility and acceptance to lack of business experience in general. The results are expected to give new information about the role of innovations play in competitiveness of small entrepreneurial firms in Finland.