Correlates of innovation capability among SMEs in Turkey: An empirical study

The aim of this study is to determine the impact of innovation indicators on innovation capability for small and medium enterprises (SMEs) operating in Turkey. To this purpose, a causal framework is developed where the internal and external indicators of innovation lead to enhanced innovation capability. Data sample covers 1663 SMEs. Sample distribution resembles the population in Turkey. The empirical findings emphasize the positive effect of training and customer cooperation on process innovation and product innovation. Moreover, R&D expenditure in total revenue is very influential on product innovation activities, indicating its significance for new product development of SMEs. Among ICT application indicators, the impact of e-trade dominates web-site ownership and portal membership. Results indicate that the SMEs are open to training and they regard knowledge as an important channel for creating innovative activities. However, their technical infrastructure utilization should be encouraged and their international links should also be strengthened through incentives and supports by government, public and private sectors.ⁱ