The external factors leading to product innovation outcomes in the Visegrad Group-Structural Equation Model Approach

Abstract

This paper empirically investigates the role of external factors which drives small and medium enterprises product innovation in the Visegrad Group. An empirical analysis is based on the Business Environment and Enterprise Performance Survey conducted by the World bank with a combined sample of 2002 small and medium enterprises (SMEs) in the Czech Republic, Slovakia, Poland, and Hungary. The results of the Structural Equation Model indicate that product innovation performance is slightly higher among SMEs that are proactive in strengthening their relationships with innovative suppliers, users, and consumers. Furthermore, the findings of this paper support the view that SMEs will have better new product development results if they improve their relationships with foreign-owned firms and collaborate with external research firms. Again, the empirical study will give insights into the SME's product innovation outcomes in the Visegrad Group and a wake-up call to SME's practitioners and stakeholders on the need to collaborate externally across the European regions.