Abstract

This study examined the innovation that leads to a competitive advantage in the frozen food business in the context of small-sized and medium-sized enterprises (SMEs). The research process consisted of three parts: 1) a literature study; 2) an empirical research study using questionnaires as a data collection tool; and 3) an analysis and conclusion of the research results using exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modelling (SEM). The findings showed that innovation enhanced the advantages in competition via external factors. These external factors were divided into two groups: micro-oriented factors and macro-oriented factors. The external factors at the micro level had more influence on the innovation development of the frozen food businesses than those at the macro level. The results showed that entrepreneurs, especially SME entrepreneurs, need to adapt and readily prepare themselves to face upcoming economic changes, which are about to occur not only at the global level but also at the regional and the country levels. In addition to the internal contexts within the organization, external factors are also important, especially those that will lead to the development of innovation.

Introduction

Small- and medium-sized enterprises (SMEs) play an important role in the economic and social development of a country. The roles of SMEs are reflected in the creation of jobs and income, and improved trade balance and are the main mechanisms in revitalizing and enhancing national economic advancement via income generation and job creation. In addition, SMEs are the starting point of development into an industry. Most large companies at present developed from SMEs (Oduntan, 2014, Robu, 2013). SMEs are a major type of company, accounting for 95–۹۹ percent of all businesses, with additional job creation totalling more than 60–۷۰ percent (The Organization for Economic Co-operation and Development [OECD], 2016). In 2015 in Asia, SMEs accounted for 96 percent of the total enterprises and created more than 50–۸۵ percent of the total employment positions within each Asian country.