What do innovative SMEs achieve? Irrespective of the dimensions of technological
innovations, SMEs intend to achieve either cost effective, quality improved, improved
versions of existing products, or altogether new products. This is because SMEs need
innovative products if they have to gain and maintain technological advantages (Lee
1998). If they succeed, they will be able to realize a greater share of such innovated
products in their total sales. Lehtimaki (1991) observed in the context of Finnish SMEs
that on the average, the contribution of innovated new products was more to total sales
than to profits. Roper (1997) whose study focused exclusively on product innovations in
German, UK, and Irish SMEs, ascertained that the output of innovative SMEs grew
significantly faster than that of non-innovators implying that innovated products
contributed to the faster growth of the former. Engel et al. (2004), similar to Roper, found
that sales turnover of innovative firms grew faster than that of non-innovative firms. They
detected a significant relationship between the share of innovative sales and sales
turnover change of firms. Lumiste et al. (2004) found that innovation effects were felt in
terms of both product-oriented results such as (i) improvement in quality of goods and
services, and (ii) increased range on goods and services, and process-oriented results like
increased production capacity and improved production flexibility.