Innovation Practices of Small and Medium Scale Enterprises in Madurai Region, India - A Case Study

This paper explores the determinants of innovation in small businesses from a survey covering fifty self-employed people in and around Madurai in India. Self-employed people running businesses with and without employees were included in the study and the types of innovation were differentiated. The business units selected were classified as small scale enterprises owing to their investment and capital structure. Though the units considered for the study are suppliers catering the needs of other industrial units their involvement in innovation practices and its impact is studied. The Education of the people running the business is considered as a vital factor as it has impact on the innovation practices and management style. The purpose of this study was to find out the major constraints in running small and Medium Scale Enterprises pertaining to innovation practice. The methodology adopted in this study was a random sampling of 50 self-employed people. The findings of the study indicated that the major barriers to implement innovation in small and medium scale enterprises are lack of infrastructure, financial deficiency, technical and professional constraints, and uncertainty regarding return on investment, inexperience and lack of awareness and need to practice innovation. The limitation of the study is that the sample size of small and medium scale enterprises selected was small to generalize the results.