Abstract

Innovation has been regarded as one of important impetuses to gain competitive advantages and achieve sustainable development for small and medium-sized enterprises (SMEs) in the past thirty years. However, SMEs in China have currently confronted a lot of problems impairing their innovation performance. This study aims to identify the main challenges hindering successful innovation of Chinese SMEs. Based on the previous academic studies, there are five research variables are developed and evaluated: lack of financial support, inadequate research and development (R&D) activities, the shortage of technical and skilled employees, weak entrepreneur orientation, improper governmental and legal environment. Furthermore, the primary data are collected by structured-questionnaires from 120 SMEs in Beijing. According to the research results analyzed by SPSS, it reveals that lack of financial support and inadequate R&D activities are major challenges for Chinese SMEs to achieve innovation. The shortage of technical and skilled employees as well as the improper governmental and legal environment is other barrier. Therefore, more responsibilities and actions should be taken by the government and SMEs themselves to enhance the innovation capability of Chinese SMEs. On the other hand, only one factor—weak entrepreneur orientation, is not regarded as a key challenge. This indicates Chinese entrepreneurs have increasingly realized the significant role of innovation played in the survival and long-term prosperity of SMEs recently.

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