The Profile of Innovation driven Italian SMEs and the relationship between the firms' networking abilities and dynamic capabilities.

In recent years, there has been an upsurge of interest in innovation by businesses. This heightened interest is driven by the changes and developments within the competitive environment in which businesses operate. The paper seeks to develop a framework depicting the traits and profile of the innovation driven SMEs operating in the Italian manufacturing sector based on a detailed examination of the existent literature and the findings that emerged from an empirical study carried within Italian manufacturing SMEs. Two broad research questions guided the empirical work that was carried out within the specific sector: (a) what variables characterize the behavior of the innovation driven firm? (b) what is the relationship (direct/indirect) between the firm’s dynamic capabilities and its networking abilities?The empirical evidence emerged from a quantitative research study of 3.500 Italian manufacturing SMEs. Graphical log-linear models were applied to understand the interactions of networking firms and their ability to innovate. The empirical evidence supports that those SMEs that are innovation driven, exhibit specific capabilities. An SME is viewed as a ‘Complex Adaptive System’ one that needs to constantly, plan, create and maintain relationships with all its stakeholders, whilst adapting its capabilities and corporate behavior to the external environment.