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Barriers to Innovation & Growth in High Technology SMEs: The Role of Absorptive Capacity

Aims & objectives

This report, commissioned by the Council for Science and Technology, was concerned with identifying those factors which constrain SMEs from attaining their full growth and innovative potential in high technology industries. It focused in particular on those characteristics which reflect a firm’s ability to recognise knowledge needs, obtain access to such relevant knowledge and absorb and utilise it effectively. We took these characteristics as measures of a firm’s “absorptive capacity”, or ability to explore access and exploit the knowledge base relevant to its innovative and competitive strategy. 

We grouped these characteristics under three headings: management, collaboration activities, and sources of knowledge. We also examined their R&D activity. In addition to absorptive capacity characteristics we also attempted to distinguish successful from unsuccessful firms in these high technology industries in terms of their growth ambition, start-up and other market and competitive characteristics, defining success in terms of either growth or innovative performance and in terms of combined growth and innovative performance.

The analysis was based upon existing survey-based databases of the SME sector in the UK held by the CBR.


Cosh, A., Bullock, A. and Milner, I. (2007) Barriers to Innovation and Growth in High technology SMEs: the Role of Absorptive Capacity. A report from the CBR for the Council for Science and Technology, 26th February.

Core team

Alan Hughes
Andy Cosh
Anna Bullock
Isobel Milner