Innovation Network and Policy Services Environment of SMEs: An Empirical Study in China

Innovation has been one of the key drivers of sustainable competitive advantage for small and medium-sized enterprises (SMEs). On the basis of a sample of 188 Chinese SMEs, this paper attempts to: (i) explore the relative importance of the innovation network and main policy services in innovation for SMEs by using the technique of Relative Important Index (RII), and (ii) seek to highlight any differences between foreign-invested enterprises (FIEs) and wholly Chinese-owned enterprises (WCOEs). The study finds that the cooperation with "customers" is the most important innovation network for SMEs, and the "preferential tax policies" is the most favorable policy. Interestingly, the study indicates that differences are found between FIEs and WCOEs (the former emphasizing "financial policies", and the latter emphasizing "innovation network with technological agencies and service providers", etc.). Overall, these findings reveal that many Chinese SMEs have difficulties in achieving successful innovation. So, policies should be made based on constraints to innovation for SMEs.