SMEs are generally known for informal innovations. That is they carry out their
innovations along with their day-to-day manufacturing operations within the same
premises. The obvious reason is resource constraint. The same holds good for the SMEs
in Bangalore in all the three sectors. About 95 per cent of the SMEs in auto and machine
tool sectors and 77 per cent of the SMEs in the electronics sector carry out innovations
informally, without any exclusive innovation department. Given this, it is important to
know the driving forces of innovation. A sizable majority of the SMEs identified both
internal and external factors as the driving forces of their innovations (Table 2).