This study investigates and compares hi-tech SMEs in China and France showing the
differences in innovation capabilities between the two countries. This empirical
research is based on a comprehensive questionnaire. Sample firms are randomly
selected from Shanghai in China and Rhône-Alpes in France. To control the
exogenous industrial variance, sample firms in the two countries with the same
proportion of industrial sectors are selected.
The study concludes that the differences on innovation capabilities are significant
through a quantitative analysis. Moreover, the innovation stages of hi-tech firms
depend on some key factors, such as R&D expenditure, firm size, granted patents,
profit intensity, new products etc., positively correlated with innovation capabilities.
The finding indicates that, compared to their larger counterparts, the hi-tech SMEs
have distinctive capabilities for innovation which are determined by their
resource-constraints and their particular innovation strategy. Managers should
consider these factors in formulating an effective innovation strategy. Simple
involvement in innovative activities does not guarantee an improvement in innovation,
only successful innovative activities make a difference.