Does Market Information Processing Improve Product Innovation Successof Small and Medium Enterprises

Does market information processing improve product innovation success of small and medium firms? Innovation is inherently an information processing activity. An important element of information processing is the use of market information. While some researchers argue that entrepreneurs do not need formal processes to collect, disseminate and use market information, others suggest that the use of formal market information processes is positively related to product innovation success. Therefore, the main objective of this study is to assess whether market information processing improve product innovation success of small and medium enterprises. To achieve the objective, a triangulation method (qualitative, quantitative and descriptive) was employed in the investigation. Instruments used to collect data were pre-test, post-test, interviews and questionnaires. A series of hypotheses are posited to explore the relationships of the variables. A field survey administered to 425 small and medium enterprises in the manufacturing and services sector are used to gather the data. Out of the 425 surveys sent, hypotheses are empirically tested using structural equation modelling software’s (AMOS) and regression analysis on a data set of 388 firms. Based on the analysis, all hypotheses are supported. According to the findings of this study, all market information processing activities, acquisition, dissemination and utilization are positively significantly correlated. As general market information processing activities positive significant (p<.001) effect on product innovation success of SMEs. The results revealed that the higher effect of market information processing determines high level of product innovation success. Therefore, we suggest that the development of market information processing activities is an important instrument for the small and medium enterprises to achieve a high level of product innovation success.