Implementing SME innovative practices: a framework of push-pull factors

Despite the enormous contribution of Small and Medium Enterprises (SMEs) to the Australian economy, there is arguably no study on factors that stimulate SMEs to create and exploit their new ideas. However, previous studies have shown that such innovation practices lead to improved SME performance. We develop a model that focuses on organisational and external factors that affect SME innovation practices in Australia. We highlight funding, collaboration, knowledge infrastructure, human capital, and management/leadership as the key organisational factors that affect SME innovation practices. Our model also highlights legislations/regulations, political climate, technology, economic, social and demographic as the external factors that indirectly affect SME innovation practices. We further argue that these external factors ‘push’ or ‘pull’ SME innovation practices depending on the interaction with specific organisational factors. As a context case, we use some legislations and tax policies in Australia to highlight how they indirectly affect the implementation of SME innovation practices.