The focus of the study was to develop a framework to improve innovation capability of SMEs which do not usually have much available financial wealth and required planning infrastructure in order to be competitive in the digital economy (Nada et al, 2012). The need for the study was based on the previous research findings on the difficulties faced by SMEs to benefit from fast moving digital opportunities due their current digital maturity level against digital leaders who outperform their peers in every industry (Westerman et al, 2012). .
The study found that the best way to approach the problem was to use the link between innovation capability and firm performance, which is significant in the presence of performance measurement (Saunila, Pekkola and Ukko, 2014). However, the study took the path of using a leading indicator such as innovation pipeline to improve innovation capability proactively to seize opportunities from rapid advances in digital technologies building a culture of relentless and rapid business experimentation.
The use of innovation zones to categorize potential innovation performance zones addresses the flexibility much required to improve innovation capability in a proactive manner in the digital economy. As a result, SMEs can use the assessment of the innovation performance gap proactively to gauge whether the company would achieve a high organic growth in performance based on the planned innovation capability uplift.
The company can then use the innovation capability gap from the proposed framework to determine the areas that are required to be uplifted to generate the innovation pipeline that can achieve the intended growth in performance. As a result, the proposed framework addresses another gap in measuring the innovation projects in terms of their impact on the overall goals of an organisation (Nada et al, 2012). This enables SMEs to respond to opportunities presented by rapid advances in digital technologies found in the digital economy.