What Are the Impediments to Innovation among Australian SMEs in Agriculture Industry - Research Proposal Example

Download file to see previous pages The paper "What Are the Impediments to Innovation among Australian SMEs in Agriculture Industry" is a great example of an agriculture research proposal. In a globally competitive market, innovation is one of the key ways that businesses whether small and big improvements on their products, services, processes and management in order to remain competitive. A company that fails to embrace innovation in the contemporary business environment runs the risk of producing obsolete products through outdated processes (Lipprini & Sobrero, 1994). This, in turn, minimizes the firms’ profit-making capabilities, making them more susceptible to business failure. Due to their capital limitations, low-expertise and high-risk aversion tendencies, Small and Medium Enterprises (SMEs) in Australia and elsewhere in the world adopt innovation at a much slower rate that the large established firms. Consequently, they do not benefit from the innovations at a higher rate like their larger-established firms do.

In a study was done by Madrid-Guijarro, Garcia and Auken (2009, p. 465) for example, it was discovered that innovation-related costs posed a significant barrier in the adoption of innovation by SMEs. Addressing the Australian case, Nousala et al (2008, p. 736) observes that SMEs in the agricultural sector lack an understanding of the different available innovations, while others lack the knowledge on how to implement the same. Others, on the other hand, are fully aware of the benefits of innovation adoption, but the associated costs remain the major inhibiting factor (Lipprini & Sobrierom, 1994). Still, others have the knowledge and capacity needed to adopt innovation, but the managers of such firms fail to appreciate the importance that innovative processes could play in their businesses. A high percentage of SMEs in the agriculture industry are owned by individuals and no consultation takes place about the processes to be adopted. This means that the owner’s decisions regarding processes to be used in the business are often final.

• 1.1 Background

Small and medium-sized enterprises in Australia are defined as “any businesses employing less than 200 employees” (Scupola, 2009, p. 152). SMEs not only make a significant contribution to the economy but are also more flexible than larger established firms especially in their decision-making processes because they have lesser bureaucratic structures. This, however, is a limitation in itself especially in small and medium firms owned by individuals. Often, when one person is the owner and the decision-maker, he or she does not consult much and depends on the limited insight he/she possesses to make decisions. The entrepreneurs’ decisions are not vetted by anyone in the firm, and the least the employees under him can do is follow his/her directives.

According to Scupola (2009, p. 152), SMEs contribute approximately 33 per cent of Australia’s gross domestic and employs 70 per cent of the country’s workforce. In a report authored by Ergas and Orr (2007), SMEs contribution to Australia’s agricultural sector is pegged at 95 per cent. Most of these fall under the Small enterprise's categories mostly employing less than 20 people. According to the report, most of the SMEs in the agriculture industry has the market for their products assured by the bigger firms dealing with agricultural products as their main materials. This is the case because the larger firms usually in the processing and manufacturing industries rely on the agriculture-based raw materials as their main inputs.

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