Discussion Papers

Constraints, Determinants of SME Innovation, and the Role of Government Support

By Sothea Oum, Dionisius Narjoko and Charles Harvie

ERIA Discussion Paper 2014-10

Posted: May 2014


This paper provides an empirical analysis of potential constraints to SMEs upgrading their capability to innovate, and assesses the effectiveness of government support in overcoming these constraints. The justification for government support is that market failures can hinder SMEs' access to information, finance, technology, and human resources. This paper focuses on the impact of the perceived effectiveness of government support through business development services in terms of providing: (i) training; (ii) counselling and advice; (iii) technology development and transfer; (iv) information; (v) business linkages; (vi) financing; and (vii) a conducive business environment. The effectiveness of this support is evaluated against the ability of SMEs to innovate.


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