If SMEs are able to reduce costs, improve quality, improve product shapes/dimensions,
increase the range of products, and as a result increase the share of innovated products in
their total sales, does that directly contribute to the growth of firm size in the form of
growth of sales turnover, investment, and employment? In other words, does innovation
contribute to SME performance directly? According to Hoffman et al. (1998) the vast
majority of empirical studies on innovation in SMEs have not covered the link between
innovation practices and firm performance. Roper (1997) comparing the innovation
strategies of German, UK, and Irish SMEs, observed that there is a strong association
between innovation and turnover growth. But Edwards et al. (2001) argued that growth is
not necessarily dependent on those factors attributed to ‘innovative potential’. Of course,
they further stated that this does not mean that innovation does not lead to growth, rather
there is a need to develop methods to assess the relationship.