Relationship between cooperation networks and innovation performance of SMEs

Abstract The complexity of innovation processes led to a tremendous growth in the use of external networks by small- and medium-sized enterprises (SMEs). Based on a survey to 137 Chinese manufacturing SMEs, this paper empirically explores the relationships between different cooperation networks and innovation performance of SME using the technique of structural equation modeling (SEM). The study finds that there are significant positive relationships between inter-firm cooperation, cooperation with intermediary institutions, cooperation with research organizations and innovation performance of SMEs, of which inter-firm cooperation has the most significant positive impact on the innovation performance of SMEs. Surprisingly, the result reveals that the linkage and cooperation with government agencies do not demonstrate any significant impact on the innovation performance of SMEs. In addition, these findings confirm that the vertical and horizontal cooperation with customers, suppliers and other firms plays a more distinct role in the innovation process of SMEs than horizontal cooperation with research institutions, universities or colleges, and government agencies.