Small and Medium Enterprises: Innovation and Disruptive Innovation

This article explores the role of small and medium enterprises (SMEs) in innovation and disruptive innovation. It discusses the types of SMEs that can take advantage of disruptive innovation and the internal and external factors for successful implementation. The article also defines disruptive innovation and entrepreneurial enterprise and provides a literature review on SMEs and innovation.

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Introduction
The important role as well as the impact of the small and medium sized enterprises has already
been exhibited across the world. The SMEs signify an important part of the economies of both
the established and the growing nations (Assink, 2006). They are vital segment and driver for
many of the national economies (Christensen, Raynor & McDonald, 2015). When it comes to the
emerging economies the SMEs usually account to over ninety percent of the organizations, and
60% of the employees are employed in this organization and they also account to 55% of the
GDP in a country. Nonetheless, the growth of the SMEs particularly in emerging countries has
slowed down for the last few years. Some of these companies are unable to transcend the barriers
of the scale (King & Baatartogtokh, 2015). Improvement in the scalability, performance and the
sustainability of the SMEs could help achieve an efficient marketing as well as the sales
practices (Assink, 2006). In this research the company which has been chosen is MIUI 9. This
company has been making various android programs. This application has a user interface based
on the Android which has been loved by the users.
Definitions:
Disruptive innovation/ development
This refers to the term in the vast field of the business administration and it pertains as an
innovation that generates new market and value coverage. The innovation could disrupt a market
which is pre-existing and the value network. This results in displacing of the market that is
definitely already established, products and the alliances (Cortez, 2014). The disruptive
innovation tends to be produced by the outsiders as well as the entrepreneurs, rather than the
existing market leading organizations. The disruptive innovation has become a powerful means

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when it comes to broadening as well as growing a whole new market and providing the new
functionality, which often might disrupt the existing market linkages.
Entrepreneurial enterprise
This refers to an individual who organizes as well as controls any specific enterprise, especially a
company, with a substantial initiative and risk (King & Baatartogtokh, 2015). This individual
will have various skills such as self-awareness, passionate and also purposeful.
2. Literature review
In this review it will clarify the concept of the SME, innovation and the disruptive innovation in
details so as to identify the research gaps that will be addressed in the future.
SME
There has been consensus among the policy makers, economists as well as the enterprise
professionals that the small and medium enterprises are the crucial drivers of the economic
growth (Cortez, 2014). A healthy SME industry has contributed prominently to the economy via
the creation of the employment possibilities, which could generate high volume of production,
increase in the exports as well as introduction of innovation as well as entrepreneurship skills
(Ruan, Hang & Wang, 2014). The dynamic role of the SME especially in the developing
countries has insured them as the engine via which the growth objectives would be achieved
(Christensen, Raynor & McDonald, 2015). According to the research done by UNIDO they have
estimated that SMEs represent to over ninety percent of the private business which contribute to
a lot more than 50% of the employment as well as the GDP in many of the growing countries .
SMEs they have experienced a boost in the competition pressure which has been fueled by the
globalization, laws, trade barriers, and an increase in the marketplace expansion due to the

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emerging technologies and the innovation. The SME are able to survive due to their adaptability
and agility for instance their close proximity to the customers, openness towards new working
ways and risk taking methods.
Innovation
Innovation has been regarded as the use of more desirable alternatives which satisfy the new
requirements, unarticulated requirements or maybe the existing needs in the market. It is often
achieved via more effective products, services, processes and even alternative technologies that
exist to the market, society and the governments (Mahto, Belousova &Ahluwalia, 2017).
Innovation can be referred to as something original and more effective as a consequence which
can break into the market or perhaps a society (Wan, Williamson & Yin, 2015). When it comes
to SME the objective of innovation is in optimizing of the research, development as well as
innovation environment for the SMEs, which could include the establishment and the facilitation
of the range of the support services (Wan, Williamson & Yin, 2015). The aim of MIUI 9
organization is to strengthen their innovation capability of this SME and be able to create value
to the market or the society. Innovation in SME entails all actions which provides intermediated
support to the SMEs. The actions will entail tailored services as well as projects.
Disruptive innovation
All the innovation usually entails uncertainty and this is particularly true for the disruptive
innovation. The disruptive innovation usually arises only as the advancement of the science and
the technology intersect with the evolving markets in order to create previously unimagined
opportunities (Liao, Rice & Lu, 2015). Disruptive refers to introduction of completely new
approaches in the SME which have the potential to creating a new industry or even transforming

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the existing one. In MIUI9 organization they have developed a MIUI application that is based on
Android which has come to be loved by everybody globally (Wan, Williamson & Yin, 2015).
Over the years they have been able to change the level of this technology and developed features
and optimizations which are able to enhance the way individuals uses the phone. The MIUI
application is intuitive, helpful and at the same time easy to use (Markides, 2006). Innovation
could be the key differentiator between the market leaders and the other competitors. It has been
found to help in the positive development of a given country, society at large as well as the
environment that makes it all possible.
3. Critical review/ examination
Type of SMEs that could take advantage of disruptive innovation.
There are various types of SMEs which could take advantage of the disruptive innovation. One
of the type of SME is hybrid. These SMEs embodies individuals who are the content experts as
well as implementation experts (Wan, Williamson & Yin, 2015). These SMEs they are expected
to offer the support to both the content of a program and in the best deliver of it. The second
group is the sentinel SMEs, this type of SME has been reserved to those in the world who
manages and at the same time monitors many projects (Klewitz & Hansen, 2014). These SMEs
could take advantage of the disruptive innovation since they are involved in monitoring huge
project and when they see a project which will benefit the organization they will take advantage
of it. Another kind is functional SMES. These are vital especially to a project (Wan, Williamson
& Yin, 2015). They could include the programmers and software designers.
Internal and external factors for successful implementation of disruptive innovation.
Company

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Customer needs and expectations: The customers’ needs and the expectations are important in
improving on the process more effectively (Klewitz & Hansen, 2014). The orientation to the
clients and their satisfaction are well known concept when it comes to the field of the total
quality management.
Innovation of the business product: when it comes to the innovation of the product there are
approach which are based on the customer needs in order to emphasize that organization in their
innovative effort could turn to the needs of the users.
Industry maturity: The main innovation model as well as the development usually help the
managers in understanding what kind of innovation and strategies that would be considered in
various periods of the development and various competitive surroundings (Markides, 2006).
Financing: This factor could contribute to successful implementation of the disruptive
innovation especially when the company set funds aside aimed for the purpose of implementing
new application within the organization.
Human resource/ entrepreneurial team: The human resource within an organization could
employ a team who will be responsible for the implementation of the disruptive technology.
Strategic alliances: A company could form an alliance within another company that they
compete in, within the same business (Schwab, 2017). They will merge on their resources to
enable them implement a disruptive innovation within their business operation and this will offer
them a competitive edge to the other organizations within the same business operations.
Government
Policies:

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The highly regulated industries are not innovative. The government regulation can disable
innovation. The government has set policies which are aimed to reduce the barriers to entry for
the new technologies and organization. They have provided new critical infrastructure on which
the new technologies such as the disruptive innovation could operate and grow. Governments’ in
many countries have distributed the social costs for competing alternatives, which has changed
on the value proposition to the emergence of these technologies as well as the business models.
In additional to the regulatory policies it is possible to embrace the disruptive innovation.
Interventions:
There are various interventions which have been carried by the government to enable the growth
of the disruptive innovation. One has been through creation of the partnership between the
agencies of the government and the business, government and the NGOs and the government and
the citizens (Chu, 2017). This will enable new ways of delivery of the public services, open data
analytics and the social integration of the new technologies. The government has also
implemented the financial and the fiscal instrument which will encourage innovations within the
organizations.

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References
Assink, M. (2006). Inhibitors of disruptive innovation capability: a conceptual model. European
Journal of Innovation Management, 9(2), 215-233.
Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). Disruptive innovation. Harvard
Business Review, 93(12), 44-53.
Chu, D. (2017). 2.0 Academic Management:" Disruptive Innovation" for the 21st Century.
Cortez, N. (2014). Regulating disruptive innovation.
Klewitz, J., & Hansen, E. G. (2014). Sustainability-oriented innovation of SMEs: a systematic
review. Journal of Cleaner Production, 65, 57-75.
King, A. A., & Baatartogtokh, B. (2015). How useful is the theory of disruptive innovation?.
MIT Sloan Management Review, 57(1), 77.
Liao, T. S., Rice, J., & Lu, J. C. (2015). The vicissitudes of competitive advantage: Empirical
evidence from Australian manufacturing SMEs. Journal of Small Business Management,
53(2), 469-481.
Mahto, R. V., Belousova, O., & Ahluwalia, S. (2017). Abundance–A new window on how
disruptive innovation occurs. Technological Forecasting and Social Change.
Markides, C. (2006). Disruptive innovation: In need of better theory. Journal of product
innovation management, 23(1), 19-25.
Ruan, Y., Hang, C. C., & Wang, Y. M. (2014). Government׳ s role in disruptive innovation and
industry emergence: The case of the electric bike in China. Technovation, 34(12), 785-
796.
Schwab, K. (2017). The fourth industrial revolution. Crown Business.
Wan, F., Williamson, P. J., & Yin, E. (2015). Antecedents and implications of disruptive
innovation: Evidence from China. Technovation, 39, 94-104.