Role and importance of innovation in business of small and medium enterprises
Role and importance of innovation in business of small and medium enterprises

Summary/Abstract: Small and medium enterprises (SMEs) have central role in the global economy as a result of their key features – SMEs are dynamic, easily adaptable and flexible. Today, SMEs are considered to be one of the key driving forces of the economic growth and job creation. Around 90% of all businesses in the global economy are SMEs; their share in total private sector employment is between 61%-81%. One of the main features of the SMEs is the ability for producing innovations. Modern growth theories acknowledge the role of innovation as central to enhancing growth and productivity. Innovations are considered to be the instruments by which the entrepreneur creates new products and augments the current products. This paper will try to examine the importance of innovation and innovative activities in SMEs. Additionally, the paper will explore some specifics of SMEs, concept of innovation, innovation types and determinants of innovation, as well as the obstacles to innovation faced by the SMEs.

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