The above discussion leads to the next question: do SMEs necessarily engage themselves
in product innovations or process innovations, or both? In practice, SMEs might
undertake: (i) only process innovations in the form of material substitution, change in
technical process of manufacturing, etc. to achieve cost reduction or quality improvement
or (ii) only product innovations in the form of changing product shapes/dimensions/sizes
or introducing improved or new products, or (iii) both. According to Hoffman et al.
(1998) SME innovations are more likely to involve product innovation than process
innovation (which is important nonetheless). Lehtimaki (1991) found that innovation in
most of the Finnish SMEs is both product- and process-oriented.