Abstract:
The purpose of this article is to contribute to the empirical literature
which investigates barriers for innovation in less developed countries.
Small and medium enterprises (SMEs) have been identified as an
important strategic sector for promoting growth and social development
of Sri Lanka. Though SMEs have gained wide recognition as a major
source of employment, income generation, poverty alleviation and
regional development in Sri Lanka, the annual growth rate is at a low
level due to lack of innovation and inefficient management. Thus, this
research, conducted in Sri Lanka, a small less developed country,
concentrates on barriers approach to innovation. The empirical analysis
was carried out at the firm-level, on the ground of a survey covering 50
SMEs in Sri Lanka. A percentage analysis and a regression analysis
were carried out to identify the most important external and internal
barriers to innovation as perceived by the owners or senior managers in
SMEs. The most important external barriers, as perceived by the firms'
owners/managers were lack of capital for R& D (bank loans), shortage
of necessary technical skills, easy to copy and lack of opportunities to
cooperate with other firms and institutions. The paper finds that
inadequate financial means, lack of qualified managerial or technical
persons, inadequate R&D, excessively perceived risk of innovation and
lack of time as the strongest internal barriers for their organizations. The
study of barriers offers, nevertheless, some interesting clues to the
innovation practice in small less developed countries. Some similarities
with barriers in industrialized countries were found, but many
differences as expected from the peculiar environment in countries like
Sri Lanka.
