The above discussion brings out that no empirical study has explicitly probed the
relationship between innovation and firm growth in the Indian context. Further, Indian
studies done so far, have clubbed SMEs of different sectors together and thus lacked
sector-specific focus. Moreover, these studies focused on a particular year for data
collection and are therefore, cross-sectional in nature. But the impact of innovation, as
argued by Coad and Rao (2008), will not be instantaneous, rather there would be
considerable lags between innovation and its achievements and outcomes. Therefore,
there is a need to focus on SMEs of specific sectors and over a period of time, to
understand and analyse the nature and system of innovation in SMEs and probe the
relationship, if any between innovation and growth. It is towards filling up this research
gap that we have undertaken this study.