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Technological Innovation Drives Hi-tech SMEs in Sustain LI Hongguang 1 School of Management, University of Jinan , Jinan,Shandong Province,China, 250022 Abstract: This paper attempts to discuss issues pertinent to the sustainable development of technological innovation in small and medium High-tech enterprises. The issue of how to accelerate technological innovation and improve the sustainable development capabilities of small and medium High-tech enterprises has received attention from the government, theorists, and enterprises. Centering on this theme, this paper firstly defines the characteristics of small and medium High-tech enterprises and the types of technological innovation in small and medium High-tech enterprises. Afterwards, this paper analyzes the reasons why technical innovation can foster sustainable development of small and medium High-tech enterprises. At the end, this paper proposes measures to promote sustainable development of technological innovation in small and medium High-tech enterprises. Key words: Technological Innovation; Small & medium High-tech enterprises; sustainable development Rapid advances in science and technology have played extremely important role in promoting the implementation of sustainable development strategy. The scientific achievements of high technology have been transformed continuously into productive forces, making technological innovation the biggest and most powerful driver of global economy. In the environment of the global economy, the small and medium enterprises can increase the competitive advantage to cope with the ever-increasing market competition by continual technological innovation. The issue of how to accelerate technological innovation and improve the sustainable development capabilities of small and medium enterprises has received wide attention from the government, theorists, and enterprises. 1 The Characteristics of small and medium High-tech enterprises Small and medium high-tech enterprises are enterprises which research, develop, produce and market high-tech products or apply high-tech on a very large scale. In general, they have such characteristics that are different from traditional enterprises: 1.1 High-tech content Providing products and services of high-tech content is the basic difference between small and medium high-tech enterprises and traditional enterprises. Since the carrier of technical knowledge is person with ability, human resource has become number one element of small and medium high-tech enterprises. The proportion of technical personnel of small and medium high-tech enterprises is understandably high, generally consisting of greater than 30% of total staff; Correspondingly, R&D investment as a percentage of revenue generally accounts for 10%, or even as high as 25 ~ 30%. 1.2 Miniaturization Due to their small size and multi-purpose characteristics, most of small and medium high-tech enterprises are enterprises which are at the starting up phase. They produce fewer products at small scale and consume fewer raw materials. 1.3 Innovation For small and medium high-tech enterprises, technological and managerial innovations are the fundamental means of survival and development. Through sustained innovation, they can quickly turn technological advantages into economic advantages and achieve virtuous circle of "innovation-profit more innovation”. 1.4 High risk and high return Small and medium high-tech enterprises are engaged in commercialization activities based on scientific and technological inventions, they need to master complex knowledge and face rapidly changing market environment. Short product life cycle, uncertainties in technologies, customers and business strategies, 189 along with fierce competition all contribute to high investment and high risks. Many small and medium high-tech enterprises have failed in the initial phase because of shortage of fund. According to the statistics, high-tech enterprises in the United States have an average life of five years; only 30% of them live longer than 5 years. While in China, 90% of small and medium high-tech enterprises disappear within five years, only 3% still survives longer than 8 years. 2 The types of technological innovation in small and medium High-tech enterprises 2.1 Product innovation Product innovation refers to small and medium High-tech enterprises are engaged in innovation activities of improvement, enhancement or invention in the process of producing and managing, which aim at its own production. Product innovation may divide into important innovation and gradually innovation. Importantly product innovation refers to bran-new innovation or the new application which combines with old technology. Gradually innovation refers to use new material or new fittings to improve product performance or reduce product cost, or improve the overall system of a product through changing the part function of a product. In general, important innovation influences the development of enterprises bigger, and the influences of gradually innovation are uncertain, but the former is often difficult to realize, whose investment is also big; the latter is easily to be achieved. 2.2 Service innovation Service innovation is the developmental result of service industry in recent years, especially when knowledge-intensive service industry emerges. It not only includes new thought or new plan which transforms into new or improved service, but also includes the new service provided by the existing organizations, such as all kinds of financial derivatives. At present the popular service of networks is a successful illustration of service innovation. Because the investment for service innovation is smaller, and the demand of market changes quickly, service innovation is one of technical innovation types which most suits for small and medium High-tech enterprises. 2.3 Technics innovation Technics innovation Technics innovation refers to study and use new or significant improved production method which can improve the existing production efficiency. Because technics innovation has important action to develop new product, to improve original product as well as to enhance the output and the quality of original product, therefore, its importance certainly is not inferior to product innovation. They are frequently mutually affected, mutually blends, mutually promoted among product innovation, service innovation and technics innovation, which occupy important position in the technological innovation in small and medium high-tech enterprises. 3 Technological innovations fostering sustainable development of small and medium High-tech enterprises Technological innovation involves a series of activities such as conceptualizing new ideas, designing products, prototyping, producing in volume, marketing, and commercializing, etc. It is also a process of knowledge creation, conversion, and application. The essence of technological innovation is the emergence of new technologies and its commercial application. Only through continuous product innovation, small and medium High-tech enterprises can improve their competitive advantages and cope with market competition. Promotion of sustainable development of SME through technological innovation can be reflected in the following aspects: 2.1 The technological innovation of small and medium High-tech enterprises is to use information technology as a driving force to stimulate industrialization, apply hi-tech to all types of industries, and improve technology level of traditional industries. In order to lay out a solid foundation to enhance china’s industrial competitiveness and achieve developments in leaps and bounds, we will need to 190 accelerate transformation and reorganization of old industrial enterprises, optimize organizational structure of small and medium enterprise, enhance the vitality of traditional enterprises, and promote enterprise collaboration 2.2 In reality, competitions of small and medium High-tech enterprises often occur among enterprises with the same magnitudes. In contrast, competitions among enterprises at different magnitudes are often complementary. Through the technical innovation, the enterprises with higher magnitude shift the original industry to the outside, and those enterprises with lower magnitude accept the industrial shift to realize the reorganization, upgrade, and adjustment of industrial structures, realizing the future sustainable development of small & medium enterprises. 2.3. Through technological innovation and technological transformation, small and medium High-tech enterprises can transform and improve the technical level of their processing equipment, conserve resources, value environmental protection, promote clean production, accelerate research and development of new materials and new energy sources, so as to fundamentally transform the old growth mode of high energy consumption and high pollution to ensure sustainable economic and social development 2.4 The technology innovation is a concrete expression of the idea that “Science and technology are the primary productive forces". Through Implementation of the strategy of rejuvenating the country through science and education vigorously, improving the quality of the people as a whole, and training large numbers of outstanding entrepreneurs, scientists, management talents, and bringing into full play China's advantages to enrich human resources, we can realize sustainable economic and social development. 3 Technical innovations as the driving force to promote the sustainable development of the small and medium High-tech enterprises Over the last few years, our small and medium High-tech enterprises have developed and contributed greatly to the development of our economy. However, for various reasons, there are still a great deal of problems associated with our small & medium enterprises, including shortage of technical talents, lack of fund, lower technology level, inexperienced management, and suboptimal organizational structure. These problems have inhibited the development of small and medium High-tech enterprises and will likely be harmful to their future development, if not addressed on a timely basis. Consequently, it is very important to improve technical content of production and competitive capabilities of small & medium enterprises. It is also critical for small and medium High-tech enterprises to choose appropriate technical developmental pattern to make sustainable technical innovation. 3.1 Development strategy supported by full-time technical personnel Existing staffing strategy in small and medium High-tech enterprises relies on part-time senior technical experts as the backbone of R&D, supported by junior or middle-level technical staff. Because of limitations of small and medium High-tech enterprises, the situation will not change any time soon. Consequently, small and medium High-tech enterprises should start to develop their own senior technical expert for long-term development. The human resource strategy should be integrated with technology development, corporate development, and economical benefits to realize sustainable growth 3.2 Enhancement of the technical relevancy of product innovation The technological innovation in small and medium High-tech enterprises often target at key processes and products and is very narrow focused. Even though significant time, material and financial resources have been invested, the technological innovation is often not relevant to the future production development. Namely, one technical innovation can only be used once, causing enormous waste of resources. Therefore, small and medium High-tech enterprises should take into account the technical relevancy of product development. 3.3 Appropriate use of research and development fund Due to small size of investment and low profit, it is unrealistic for small and medium High-tech enterprises to increase research and development investment significantly in a short time frame. Therefore, while continuing to carry on new product development without reducing research and 191 development investment, small and medium High-tech enterprises should implement the strategy emphasizing sustainable use of research and development funds. This implies that small and medium High-tech enterprises should use R&D funds in an efficient and reasonable way based on their own characteristics 3.4 Improvement of the present financing methods in small and medium High-tech enterprises Financing has always been one of the major problems limiting the development of domestic small and medium High-tech enterprises. Compared with big enterprises, domestic small and medium High-tech enterprises do not have long-term, stable and sufficient financing sources. Furthermore, financing requirements of small and medium High-tech enterprises focusing on technological innovation have special characteristics, such as significant capital demand, high risk, and high reward. In view of financing requirements, small and medium High-tech enterprises should improve existing financing methods: First of all, venture capital is an ideal choice for small & medium enterprises. Second, small and medium High-tech enterprises should establish a good credit and trust system. Last, small and medium High-tech enterprises should refine investment guarantee, publish bundled bond and set up venture-compensated fund. 3.5 Policy support for small and medium High-tech enterprises to promote sustainable growth Because of lack of access to funds and information and a variety of other issues, small and medium High-tech enterprises in many countries are facing huge challenges. As demonstrated by research, government's policies and the behavior have tremendous influence on small and medium High-tech enterprises. As a result, governments should take all kinds of measures to stimulate, guide and support small and medium High-tech enterprises in the process of technological innovation. First of all, governments should establish favorable policies to stimulate sustainable development of small and medium High-tech enterprises. Second, governments should adjust policies to lead small and medium High-tech enterprises in the right direction of technological development. On one hand, enterprise policies should take into account the characteristics of technology development. On the other hand, they should also factor in the economy of scale and restrict the establishment of high-pollution small enterprises. Thirdly, governments should improve financing environment and expand financing channels. SME-oriented loans and venture capital mechanisms should be set up to promote sustainable development 3.6 Expansion of opening to the outside world and international cooperation The sustainable development of technological innovation in small and medium High-tech enterprises has become a major cause of universal concern to the international community. Small and medium High-tech enterprises should seize this opportunity and, through extensive publicity, expand our channels of cooperation with the international community, seek international aid, attract foreign investment, and advance science and technology for sustainable development. 4 Conclusions The sustainable development of technological innovation in small and medium High-tech enterprises is a systemic engineering, which involves a number of issues such as technical level, capabilities of key research and develop personnel, availability of fund for R&D and business development, so on and so forth. These questions cannot be resolved in a short time. Small and medium High-tech enterprises need to develop and implement strategy based on their own characteristics and strive to realize sustainable growth in the long run. References [1] Allen, D. T. and D. Shonnard, Green Engineering: Environmentally Conscious Design of Chemical Processes Prentice Hall, Englewood Cliffs, 2001 [2] Beloff, B. M. Lines, D. Tanzil, Transforming Sustainability Strategy into Action: The Chemical Industry, Wiley, 2005 [3] Zhou Huijun, Bi Kexin, Xu Mingkai. Methods to promote sustainable development of technological innovation 192 in small & medium enterprises. Sci-Technology and Management,2006,2: 3-5 (in Chinese) [4] Lu Hong, Development of technological and sustainable development of enterprises. Changchun Inst.Tech.(Soc.Sci.Edi.),2005,3:28-30 (in Chinese) [5] Peng Xiaosi, Persisting in the Technological innovation and Taking the Road of Sustainable Development. Sci-Tech Information Development and Economy,2005,5:35-37 (in Chinese) [6] Zheng Xiaoping. The economic characteristics of high-tech enterprises. Journal of Southwest University for Nationalities. Humanities & Social Sciences, Feb. 2004, Vol.25, No.2:289-291 (in Chinese) [7] Peng Litang. Industry Cluster Development in china and innovation network building. Journal of Jiaozuo University,Jan.2004, Vol.1:37-39(in Chinese) [8] Wang Jici. Space of innovation: Industry cluster & regional development. Beijing: Beijing University Press, 2001(in Chinese) The author can be contacted from e-mail : sm_LI [email protected] 193