SMES INNOVATION ACTIVITY CASE OF TRANSYLVANIA REGION, ROMANIA

Adina L. Negrusa, Oana A. Gica, Smaranda A. Cosma, Faculty of Business, Babes-Bolyai University, Cluj-Napoca, Romania

The SMEs play an important role in the economy of every nation, being responsible for the creation of an important number of jobs, and for a healthy competitive environment. The SMEs play an important role in stimulating the innovation. We chose to analyze the innovative behaviour of the SMEs sector form Transylvania Region, Romania (a sample of 257 SMEs acting in the field of production, services and commerce)

Sample characteristics:
Number of employees 1-9 10-49 50-250 Total Main field of activity Production 1.6% 39.1% 59.4% 100.0% Services 30.3% 31.8% 37.9% 100.0% Commerce 20.6% 63.5% 15.9% 100.0% Total 13.6% 43.2% 43.2% 100.0%

We interrogated the enterprises about : the new products/services launched on the market for 2005-2007 period, the solutions used to modify the structure of the products/services, the source of the new products/services, and whether the new products/services were new on the global, national market or companys market, the information/idea sources, the financial resources for the innovative actions, what support programs they use to ensure the success of the innovation actions, asked them to rank the factors that impair the innovative actions.

Research Results
54.47% of the SMEs choose product innovation more than 54% of the total number of innovative SMEs resulted in our sample have used product development strategies for innovation process through product or design improvements and also adopting products from other companies by buying the patents or license, subcontracting or outsourcing more than 50% of each category of new products/services was launched by medium size enterprises industrial enterprises prefer to develop new products and the services and commerce companies have introduced new products buying licenses

9%

1% 7%
Obtained patents License acquisition

42%

13%

Know-how acquisition Products take-off Self-developed Other

28%

the most used method is to modify the structure within the company the second used method is product take-off the third is by obtaining patents. the most infrequent method is to acquire license a high weight of the Transylvanian SMEs show a strong ability for innovation based on their resources

PERCENT OF NEW PRODUCTS/SERVICES

GLOBAL LEVEL NUMBER %

NATIONAL LEVEL NUMBER %

COMPANY LEVEL NUMBER %

0-20
21-40 41-60 61-80 81-100

11
1 2 8 8

36.67
3.33 6.67 26.67 26.67

36
12 12 10 15

42.35
14.12 14.12 11.76 17.65

23
8 11 11 84

16.79
5.84 8.03 8.03 61.31

11.7% of the SMEs declared that they have launched new products/services on the global market 33.1 % have lunched new products/services on the national market 53.3 % of the enterprises lunched new products/services for the company the weak economic power of the SMEs implies more an adaptation of the products to the customers needs and competitions behavior

Transylvanian SMEs indicated the business research and development activities as an exclusive source for product innovation process. This means an important development of the R&D department within the firms, having a significant contribution to product development. The first three frequent sources for information and ideas are: the competitors, the commercial partners and the clients If we take into account the size of the firm it resulted that for micro enterprises came in the first position competition, followed by suppliers and partners and for small and medium size enterprises clients and suppliers followed by competitors

FIELD Result of internal R&D activities

EXCLUSIVE SOURCE (%) 81.88

PARTIAL COLLABORATI ON (%) 18.12

R&D institute from the country R&D institute from abroad Foreign mothercompany Foreign competition

34.52

65.48

53.45

46.55

55.17

44.83

47.06

52.94

The first 5 most important factors that impair the innovative actions are: (1) the lack of qualified personnel; (2) weak R&D institutional support; (3) high market entrance costs; (4) difficult access to information; (5) the lack of information about the market The most frequent support programs used to ensure the success of innovative programs are: individual displacements for training purposes training courses, professional training programs. The support programs indicated as seldom used by the SMEs are: training courses, group displacements for training purposes, objectives oriented training programs The investigated SMEs indicated as main financing sources their own money and the credits from the banks

SOURCES FOR FINANCING INNOVATION ACTIVITIES

PERCENT

Own sources
Money form family and friends Money from Risk Funds Credits from banks Subventions from Romanian Government or other National Institutions Subventions from International Institutions

80.5
10.1 6.2 47.5 14.8

11.3

CONCLUSIONS:
The majority (61.48%) of the investigated SMEs reported they have made changes in technology and 54,45% of them carried out product innovation activities. Most of the new products were developed as a result of intern R&D activity. This has an explanation in the fact that the main source for financing the innovative actions are companys own money (80.5% of the SMEs), our enterprises turn over not being significant. Studied enterprises focus more on being competitive on the national market hence the important weight of the new products for companys markets. The majority of the innovative SMEs included in our investigation conduct on their own R&D activities both for creating new products and for modifying the existing ones. Regarding the solutions used for products modification, on the second place was ranked the alternative product imitation and together with the fact that foreign partners are preferred as an exclusive knowledge source for new products determined us to conclude that innovative SMEs, although in a small proportion (22.14%) are concentrating their attention towards the new findings from abroad. Their lack of financial power unfortunately doesnt allow them to engage in developing partnership with foreign R&D institutes, Transylvanian SMEs reporting as preferred partners for introducing new products the Romanian R&D institutes. To help the Romanian SMEs develop their innovative behaviour we consider that there is a need for support programs that would help them participate in international programs and more public funds available for innovation.