Why do only some SMEs achieve external support for better innovation performance: empirical evidence from Bangalore, India

Small and medium enterprises (SMEs) share unique characteristics of innovation and aresimultaneously bounded by resource constraints. This study probes the role of internalfactors in SMEs to obtain external support from government-promoted SME agencies, largeenterprises, R&D institutes, universities, and other SMEs to achieve better innovationperformance in the context of autocomponent, electronics, and machine tool industries inBangalore in India. Using a stepwise logistic regression analysis, this study found thatSMEs could obtain external support if they have internal technical competence (in terms ofa technically qualified entrepreneur, an exclusive design centre, and frequent product orproduct & process innovation). The use of stepwise multiple regression showed that SMEsare able to exhibit superior innovation performance if they implement innovative ideas (orexploit market opportunities) and obtain external support with technically qualifiedentrepreneurs. Therefore, policy support to enhance the firm-level technical competence ofSMEs and strengthen the external support infrastructure for SMEs would be beneficial.