Download Technological Innovation Drives Hi-tech SMEs in Sustain

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,
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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
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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
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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.
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The author can be contacted from e-mail : sm_LI [email protected]
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