Does Innovation Capability Really Matter for the Profitability of SMEs?

Abstract

The study examines the relationship between innovation capability and firm profitability. The study has been executed by conducting a web‐based survey in Finnish small‐sized and medium‐sized enterprises (SMEs). Previous research has studied the effect of innovativeness on performance. This study went thus a one step further by providing a comprehensive description of the effects of the determinants of innovation capability on profitability of SMEs. According to the results, there is only a minor effect of the determinants of innovation capability on firm profitability.