Age, Size, and Innovation Success

Innovation is an endeavor that necessitates awareness of particular capabilities, the use of costly resources, and teamwork at all levels of a company. Small and small businesses can find it difficult to innovate because of cash flow issues and the difficulty in raising the required financing. There are, still, large and older businesses that have struggled to pursue innovation and, as a result, are no longer in existence. According to research on the relationship between inventions, it is not affected by age or scale. As a result, a company's reputation as an innovator is unrelated to its age or scale. Arvanitis and Stucki p.850) examine whether access to venture capital at the early stages of formation of startups has an impact on innovation. They follow the selected firms for a ten year period to investigate whether the entities continue to persist in innovation activities. The study finds out that there are no discernible differences in the innovative activities of firms that receive venture capital backing and those that do not. More importantly, there is no evidence of persistence in innovation (Arvantis & Stocki 2014, p.861), and this supports the argument that the success of a firm as an innovator is not dependent on the age.
According to Bogliacino and Lucchese (2010, p.5), the innovation programs of young businesses is inhibited by financial constraints. Venture capital plays the role of availing the financial resource and statistics show that new firms register at least 20% of product patents. Gallagher, Ignatieva, & McCulloh (2015 p.445) point out that the largest Australian listed companies have lower average stock returns while the smaller stocks have a higher return. The argument is that the smaller firms are more successful at innovation than their larger counterparts. Gallagher et al. (205, p.445) argue that the enterprises in a concentrated industry will less likely invest in innovation because such firms are rigid and inflexible. As a result, the smaller and newer businesses propel most of the innovative activities.
Kuchiki (2007, p.1) examines the development of an industrial policy by the Asian countries. Encouraging innovation was an essential component for both the Japanese and Chinese governments and Kuchiki (2007, p.6) asserts that this program targeted the smaller and newer firms rather than the larger enterprises. The smaller and younger firms are more flexible, and with the necessary government financial backing (Gorodnichenko & Schnitzer 2010, p.23), they would be more successful at innovation. A young business might even suffer from managerial challenges, but Colombo et al. (2010. P.265) point out that a venture capitalist will provide the necessary specific capabilities. The implication is that age of a firm is not the key factor that determines the success of the innovation activities (McGuirk, Lenihan, & Hart 2015, p.967).
Baumann and Kritikos (2016, p.1) seek to find out how micro-firms (less than ten employees) are different from others regarding innovation. The study discovers that 25% of firms irrespective of size report innovation without even spending on research and development. The small companies are similar to the larger firms when it comes to their innovation activities as well as using their knowledge to improve productivity (Baumann and Kritikos 2016, p.22). According to Hussain et al. (2011, p.47), the focus of an entrepreneur is to innovate; create new opportunities in products, processes, and production systems. Most of the entrepreneurial businesses are small, and it is where the levels of innovation are highest, for instance, the small technology firms have posed a great challenge to the larger businesses (Hussain et al. 2011, p.47),
The discussion above alludes that the smaller firms have an advantage in innovation. However, Shangqin, McCann, & Oxley (2009, p.22) argue that in New Zealand, the smaller firms do not necessarily have an advantage in generating innovations because they lack the finances to fund research and development. From this, it is clear that age and the size of a firm do not guarantee that the innovative activities will be successful.
In conclusion, the success of a firm’s innovativeness is not connected to its age and size. There are numerous older companies which are not innovative and are no longer operating. However, there are also the larger and older businesses whose innovations have been great successes, and likewise, it is not a guarantee that a smaller and newer firm will succeed as an innovator. Successful innovation depends on many factors, but a fundamental component is a supportive organizational culture.
















References
Arvanitis, S. and Stucki, T., 2014. The impact of venture capital on the persistence of innovation activities of start-ups. Small Business Economics, 42(4), pp.849-870
Baumann, J. and Kritikos, A.S., 2016. The link between R&D, innovation and productivity: Are micro firms different?. Research Policy, 45(6), pp.1-22
Bogliacino, F. and Lucchese, M., 2011. Access to finance for innovation: the role of venture capital and the stock market. PTS WORKING PAPER on CORPORATE R&D AND INNOVATION - No. 5/2011
Colombo, M.G., Luukkonen, T., Mustar, P. and Wright, M., 2010. Venture capital and high-tech start-ups. Venture Capital, 12(4), pp.261-266
Gallagher, D.R., Ignatieva, K. and McCulloch, J., 2015. Industry concentration, excess returns and innovation in Australia. Accounting & Finance, 55(2), pp.443-466
Gorodnichenko, Y. and Schnitzer, M., 2013. Financial constraints and innovation: Why poor countries don’t catch up. Journal of the European Economic Association, 11(5), pp.1115-1152
Hussain, M.F., Afzal, A., Asif, M., Ahmad, N. and Bilal, R.M., 2011. Impact of innovation, technology and economic growth on entrepreneurship. American International Journal of Contemporary Research, 1(1), pp.45-51
Kuchiki, A., 2007. Industrial Policy in Asia. Japan: Institute of Developing Economies, JETRO
McCann, P., Oxley, L. and Shangqin, H., 2009. Innovation in New Zealand: Issues of Firm Size, Local Market Size and Economic Geography
McGuirk, H., Lenihan, H. and Hart, M., 2015. Measuring the impact of innovative human capital on small firms’ propensity to innovate. Research Policy, 44(4), pp.965-976