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Prepared By:
Kumar Pallav Priyam Mittal Pooja Saini Pooja Dubey Neha Mittal Ramendra Vikram Singh

Table of Content
S.No. 1. Research Paper Title Co-Creation Experiences: The Next Practice in Value Creation E-Delivery Channels in Banks A Fresh Outlook Innovation in Healthcare Delivery Systems: A Conceptual Framework Innovative Strategies to Catalyze Growth Of Indian Life Insurance Sector -An Analytical Review Value Creation through IT-supported Knowledge Management? The Utilization of a Knowledge Management System in a Global Consulting Company Value Creation In Indian Pharmaceutical Industry: A Regression Analysis Relevance of Total Quality Management (TQM) or Business Excellence Strategy Implementation for Enterprise Resource Planning (ERP) A Conceptual Study Value Creation In E-Business The Consumers Process of Value Creation Importance of Technological Innovation for SME Growth Author(s) C. K. Prahalad & Venkat Ramaswamy Dr.R. K. Uppal Vincent K. Omachonu and Norman G. Einspruch C. Bharti, C.D. Balaji & Dr. CH. Ibohal Meitei Karl Heinz Kautz & Volker Mahnke Page No. 2-3

2. 3.

4-6 7-8

4.

9-11

5.

12-13

6.

Dr. N. Sakthivel

14-15

7.

Vidhu Shekhar Jha & Himanshu Joshi

16-18

8. 9. 10.

Raphael Amit & Christoph Zott Ravald Annika M. H. Bala Subrahmanya, M. Mathirajan & K. N. Krishnaswamy

19-20 21-22 23-26

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Co-Creation Experiences: The Next Practice in Value Creation

C K Prahalad and Venkat Ramaswamy Objective: The objective of this paper is basically to delve into the concept of value creation or rather about the co-creation experiences. It explains the rapid shift from a product and firm centric view to personalized consumer experiences. Summary: The traditional concept of value creation considered consumers to be outside the firm and the process of value creation occurred inside the firm and outside markets. But with changing times, consumers are well informed, connected, empowered and active consumers. They want to interact with the firms and co-create value. Co-creation is about joint creation of value by the company and the customer. It allows the customer to co-construct the service experience to suit his needs. Products can be commoditized but co-creation experiences cannot be. The basis for interaction between the consumer and the firm are Dialog, Access, Risk-benefits and Transparency (DART). Dialog is set of conversations between the customer and the firm. It must center on issues of interest to both the consumer and the firm. Access and transparency are critical to have a meaningful dialog. Co-creation puts the spotlight on consumer-company interaction as the locus of value creation. Since no one can predict the experience a consumer will have at any point in time, the task of a firm is innovating a robust experience environment. Once the firm centric view of value creation is discarded and the co-creation view is accepted, the evidence of shift is visible in a wide variety
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of industries. Amazon and e-bay are the examples of facilitating the process of personalized experiences. The concept of co-creation is more than co-marketing or engaging consumers as co-sales agents. The interaction becomes the locus of value creation; the interaction can be anywhere in the system, not just at the conventional point of sale or customer service. Conclusion: With the change in the type of consumers that are more informed, connected, empowered and active than ever, the focus is shifting from the traditional market approach to the co-creation approach. This can be considered as an innovative method for value creation wherein the consumer gets the chance to interact with the firms and co-create value. Bibliography: This research paper has been taken from http://connectone.in/images/Co-creation.pdf on 08/08/2011 at 6:56 P.M.

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E-Delivery Channels in Banks A Fresh Outlook

Dr.R. K. Uppal The research paper titled E-Delivery channels in banks a fresh outlook authored by Dr. R. K. Uppal delves into the way the Information technology has revolutionized the entire banking scenario. It focuses on the use of various technologies by the different banks of the country so as to make banking transactions easier for the customer and to provide them various delivery channels such as ATM, mobile banking, net banking, tele-banking etc. Objective: This paper shows how the involvement of advanced information technology has helped the banking sector in its growth. The basic objective of this paper is: To study and analyze the technological developments in various banks (i.e. public, old private, new private, foreign and state banks) To study and analyze the challenges before the Indian banks especially the public sector banks. Methodology: The paper finds the share of each e delivery channels from total branches. The sample is taken from the entire Indian banking industry constituted by the various categories of banks like the nationalized banks, State Bank Group, Old private sector banks, new private sector banks and the foreign banks. The author has taken several parameters for consideration like:

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The extent of computerization in public sector banks Introduction of advanced technologies such as internet banking, net banking, telebanking.

ATMs as a percentage of total branches.

Summary: The paper shows how IT revolution has brought about a fundamental transformation in banking industry. No other sector has been affected by advances in technology as much as banking and finance. It has the most important factor for dealing with the intensifying competition and the rapid proliferation of financial innovations. The paper analyzes the impact of new technology on banking sector. The technology is changing the way business is done and opened new vistas for doing the same work differently in most cost effective manner. Tele-banking and internet banking are making forays such that branch banking may give to home banking. The major points discussed in this paper are: Increase in the number of branches providing Core Banking Solution (CBS) which is regarded as a precursor to other technological initiatives. The phenomenal increase in internet banking that is one of the reasons for the growth of banking sector and the introduction of Mobile banking that is more popular in all bank groups. The ATMs installed by the private sector and foreign banks were more than three times of their respective branches. The ATM to branch ratio was much lower for other bank groups.

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The different challenges are Increased competition, to adopt techniques to ensure higher customer satisfaction, poor human resource management, investment mistakes in IT made in past, under utilization of resources

The paper also suggests some strategies to enhance e delivery channels in banks particularly in public sector banks.

Conclusion: The gist of the paper is that the more the advanced technology is used by the banks the better will be their growth prospective. It focuses on the number of delivery channels introduced by banks by adopting the latest technology. The major concern is for the public sector banks that are using IT quite less as compared to new private sector and foreign banks. Since it is the survival of the fittest, hence, the one making proper utilization of the IT in their operations will gain in long term. Bibliography: This research paper has been taken from http://www.researchersworld.com/vol2/PAPER_19.pdf on 08/08/2011 at 19:23:47 HRS.

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Innovation in Healthcare Delivery Systems: A Conceptual Framework

Vincent K. Omachonu and Norman G. Einspruch Objective: The objective of this research paper is to clarify the concept of healthcare innovation so that it may become easier for health policymakers and practitioners to evaluate adopt and procure services in ways that realistically recognize, encourage and give priority to truly valuable healthcare innovations. Methodology: The authors have taken the references of various journals and research papers published by others and themselves earlier which talk about the innovations and healthcare. Also they have put a set of questions to help them with their research. Summary: The healthcare industry has experienced a proliferation of innovations aimed at enhancing life expectancy, quality of life, diagnostic and treatment options, as well as the efficiency and cost effectiveness of the healthcare system. Information technology has played a vital role in the innovation of healthcare systems. Despite the surge in innovation, theoretical research on the art and science of healthcare innovation has been limited. One of the driving forces in research is a conceptual framework that provides researchers with the foundation upon which their studies are built. This paper begins with a definition of healthcare innovation and an understanding of how innovation occurs in healthcare. A conceptual framework is then developed which articulates the intervening variables that drive innovation in healthcare. Based on the proposed definition of
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healthcare innovation, the dimensions of healthcare innovation, the process of healthcare innovation and the conceptual framework, this paper opens the door for researchers to address several questions regarding innovation in healthcare. If the concept of healthcare innovation can be clarified, then it may become easier for health policymakers and practitioners to evaluate adopt and procure services in ways that realistically recognize, encourage and give priority to truly valuable healthcare innovations. Lastly, this paper presents 10 research questions that are pertinent to the field of healthcare innovation. It is believed that the answers to these and other such questions will hold the key to future advances in healthcare innovation research. Conclusion: Innovations in the healthcare delivery systems have several success parameters. These include finding and supporting innovators, investing in early adopters, making early adopter activity observable, trusting and enabling reinvention, create slack (including resources) for change, leading by example, etc. The best of innovations may not be successful if the market or environment is not ready for adoption. Bibliography: This research paper has been taken from http://www.innovation.cc/scholarly-

style/omachonu_healthcare_3innovate2.pdf on7/08/2011 at 8:45 P.M.

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Innovative Strategies to Catalyze Growth of Indian Life Insurance Sector -An Analytical Review
C. Bharti, C.D. Balaji & Dr. CH. Ibohal Meitei Objective:

With more than 88 per cent of the population devoid of any form of social security, the poor spread of insurance even after nearly a decade of liberalization is a cause of major concern. Therefore this paper was written with the basic objective of designing a strategic roadmap for kick starting growth in the insurance sector.

Methodology:

This paper is exploratory in nature and explores the various strategic options that can be effectively implemented by the life insurers to improve the coverage and penetration of life insurance. The authors have used secondary data which was sourced from business journals, magazines and publications of the regulator.

Summary:

In 1818 life insurance business started in India with the establishment of oriental life insurance company in Calcutta. But it failed in 1834. In 1829, the Madras Equitables started its life insurance business in the Madras Presidency. After that in 1870 we saw the enact of British insurance act and after that in last three decades, Bombay mutual (1871), Oriental (1874) and Empire of India (1897) started in Bombay Residency. But however all of them were dominated
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by foreign insurance companies. In 1921 Indian Life Insurance Companies act was the first measure to regulate the life insurance. The Indian Insurance Companies act was enacted in 1928 and after that insurance act in 1938 was amended. The Insurance Amendment Act of 1950 abolished principal agencies. Due to unfair trade practices government nationalized the insurance business. The LIC is the monopoly in insurance sector since the time insurance sector was opened to private sector. In 1999 the insurance sector was opened for private participation and since then 24 private companies have been granted license. During the last seven years capital of Rs 962.5 has been generated by private players and out of that Rs 217.45 billion is due to foreign partners. The industry services large number of life insurance policies in world. At the time of opening the insurance was viewed as a tax saving device. The registered insurers in India as on 31 September 2010 in public sector are 1 in life insurance, 6 in general insurance and 1 in re insurance. Whereas in private sector its 22 in life insurance, 18 in general insurance and zero in re insurance. In 2009-10 the annual premium earned by insurance sector by LIC was 48.1 percent and by private players was 51.9 percent. In 2009 the single premium earned by LIC increased 0.78 percent from 2008 and in 2010 it increased by 33.19 percent. In private sector the growth in 2009 as compare to 2008 was negative i.e. -30.91 percent but in 2010 as compared to 2009 the growth rate was 10.13 percent. In case of first year premium LIC has a negative growth in 2009 of -11.36 but in year 2010 the growth was 34.49 percent as compared to last year. But in private sector first year premium growth rate was 1.29 in 2009 and 12.36 percent in 2010.

India is at 9th position in 156 countries in life insurance business. In 2009 the life insurance premium in India grew by 10.1 percent while the global growth was only 2 percent. Indias share in insurance in global market is 2.45 percent in 2009. Till 30 September 2010 40 companies has been granted license, out of which 22 is in life insurance and 18 in general insurance. Only 20%
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of the population is insured and insurance premium accounts for 2 percent of GDP as compared to the world average of 7.8 percent. A burgeoning, middle class, high per capita saving and low penetration are the key factors due to which foreign insurance companies are showing interest in India. Per capita insurance premium in India is a mere US $6, one of the lowest in the world. In South Korea it is US $1338 and in US it is $22550 and in UK it is $1589. Indias GDP growth which was growing at over 9 percent declined to the range of 6 to 7 percent but has smartly recovered and is expected to grow at 9 percent plus in the coming years.

Conclusion:

The global recession has definitely had a negative impact on the financial services industry across the globe. The insurance industry is no exception and has been adversely impacted by the recession. The Indian economy though it has slowed down, still remains the second fastest growing economy in the world. Though the insurance sector is bound to feel the negative impact of the recession, it would also make the players more strong, resilient and innovative. Considering the fact that India is grossly uninsured and underinsured, insurance companies need not panic. Bibliography: This research paper has been taken from www.scholarshub.net/vol2_i4/Paper_13.pdf on 08/08/2011 at 8:45 P.M.

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Value Creation through IT-supported Knowledge Management? The Utilization of a Knowledge Management System in a Global Consulting Company
Karl Heinz Kautz and Volker Mahnke Knowledge management a set of management activities aimed at designing and influencing processes of knowledge creation and integration including processes of sharing knowledge has emerged as one of the most influential new organizational practices. Technically the knowledge management framework is supported by a web-based information system, which itself is based on a well-known groupware platform and database system. The knowledge management framework and its IT support are geared towards the organizations model for performing customer projects. This model consists of five phases: Phase one consists of marketing activities where knowledge utilization in form of company presentations can and should take place, and where in phase five, the project closure, knowledge - in the rhetoric of the company - should be ha rested and submitted to the knowledge management system. The other phases are concerned with carrying out the actual project, and, again, the knowledge available in the knowledge management system should be used here. Methodology: The case analysis proceeds based on both qualitative interview and survey data among user groups. We conducted a number of formal and informal interviews and studied company documents concerning its policy towards knowledge management.

The large majority (89%) of the system users believes that the IT-supported knowledge management system provides the company with a competitive advantage. Several reasons for
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what some might consider as relatively low adoption and use of the IT support and its underlying framework are Technical advances concerning the internal network capacity might increase the utilization of the knowledge management system. Better information and more training about the framework and its IT support will possibly enhance the situation.

Conclusion: Our research results have analyzed the extent and some impediments of IT-supported knowledge management in a large, global consulting company. The study was explorative in nature and the purpose of the used survey instrument was to collect empirical data to get first indications concerning the objectives, the degree and the problems related to IT support for knowledge management with regard to value creation in global consulting firms. The study might be criticized for the size and selection of its sample. But even if the following Results are biased and not representative for the whole organisation and the consulting industry as such, they are valid for a small, but important segment of the companys employees and, as such, show some note-worthy trends. In summary, the knowledge management system. Bibliography: This research paper has been taken from http://inform.nu/Articles/Vol6/v6p075-088.pdf on 08/08/08 at 07:35 P.M.

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Value Creation in Indian Pharmaceutical Industry: A Regression Analysis

Dr. N. Sakthivel Summary: Maximizing shareholders value is becoming the new corporate standard in India. The returns can either be in the form of dividends or in the form of capital appreciation or both. Maximizing the shareholder value is considered as one of the fundamental goals of all business. There are a number of value based management (VBM) frameworks, shareholder value analysis (SVA) Rapport (1986) and Economic Value Analysis (EVA) developed by Stern Stewart (1990) are the two well-known ones. Impact of Eva (Economic Value Added) On Value Creation: The concepts of Economic Value Added (EVA) and Market Value Added (MVA) or shareholder value creation or simply called value creation were developed in order to reflect corporate performance more accurately. Many researchers have supported EVA as the best internal determinant of MVA. Fatemi et al categorized companies according to their ability to generate EVA and MVA. Companies with high EVA and MVA are called winners, companies with a high EVA and low MVA are problem children, companies with a low EVA and a high MVA are holders of real options and companies with a low EVA and MVA are typified as losers. From the regression analysis value creation tend to increase with increase in the levels of EVA for companies under pharmaceutical industry. The companies with high level of EVA are very highly valued and differ from valuation of companies with low and moderate EVA groups. Impact of Productivity on Value Creation: Productivity is the basis for the creation of competitive advantage. A company creates competitive advantage when the value of its sales on the long term is higher than the total cost. When the market evaluates a company, it takes its
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long-term productivity generating capacity into account. Thus competitive advantage and the creation of value for shareholders are supported by productivity. from regression analysis it is found that total productivity does not have explanatory power on value creation in short term, but it has some influence on value creation in the long-run in respect of pharmaceutical companies. Impact of Financial And Economic Variables On Value Creation: Value creation of a firm is based on their overall performance. The overall performance of a firm, on the other hand, is often measured and monitored using various financial ratios determined from its financial records. Hence, analyzing the role of financial characteristics of the firms on their value creation is very important and could give many implications to the corporate world. In addition to financial variables, consideration of macroeconomic variables is also important as it would help identify role of government financial policy on value creation of companies. Conclusion: On the whole, from the inferences of the entire results, it is found that the companies with high level of EVA are very highly valued and differ from valuation of companies with low and moderate EVA groups. So, it is clear that there is significant association between MVA and EVA for companies under pharmaceutical industry It is strongly concluded that there is significant difference in mean value creation across low, moderate and high total productivity for pharmaceutical companies. Bibliography: This research paper has been taken from www.researchersworld.com/vol2/PAPER_22.pdf on 08/08/2011 at 11:22 P.M.

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Relevance of Total Quality Management (TQM) or Business Excellence Strategy Implementation for Enterprise Resource Planning (ERP) A Conceptual Study
Vidhu Shekhar Jha & Himanshu Joshi
Objective: The aim of this paper is to understand the importance of Total Quality Management (TQM) philosophy or Business Excellence Models-Strategy Implementation for ERP Implementation within organizations. Summary: This paper talks about the Relevance of adopting TQM philosophies in successful ERP implementation. TQM many definitions but still the essence and spirit remained the same. TQM means continuous quality improvement to control organization performance where as ERP can be defined as business solutions aimed at building strong organizational capabilities for improved performance, better decision-making and competitive advantage. There are various factors like business process reengineering (BPR), top management support, stakeholder involvement, open communication etc. for establishing a total quality management (TQM) culture which plays important roles in ERP implementation and without these factors ERP implementation cannot be successful. Over the past few decades, although ERP initiatives and quality management programs have evolved independently from one another, both are considered as resources that require senior leadership commitment, high levels of investment and organizational effort, that help organizations to gain

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competitive advantage. There are some set of critical success factor which are important for the implementation of the total quality management like top management leadership for quality, supply quality management, process management, employee training, and employee involvement, measurement of perception etc. ERP is not just a software package; its a way of doing business for productivity improvement for effective decision making across the whole organization, integrated in the philosophy of TQM and for their successful implementation every organization have to follow all the factors which are listed in TQM and besides these other factors like ERP teamwork and composition, business plan and vision, project management, software development and testing, monitoring and performance evaluation. In this research paper there is an example of Sundaram-Clayton Limited which is the largest automotive component manufacturing and distributing group in India. SCL is the first company which implemented TQM and ERP in their organization. The focus at SCL is total customer satisfaction. Comprehensive integration of the supply chain through implementation of ERP Programme has further enhanced SCL's responsiveness. They understand the importance of the need to continuously honing the expertise of our human resources and learning from the best practices across the world. Training is imparted not only to the employees but also the suppliers. Total employee involvement and continuous improvement in every sphere of activity will be the twin supports on which Sundaram-Clayton quality will stand" spreads across the entire organizational value-chain, including marketing, operations, product development, finance, and personnel. Hence, we see that the SCLs strategic clarity about its long term goals has facilitated its journey towards business excellence. Conclusion:

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TQM brings problem solving techniques and continuous improvement opportunities, which facilitate implementation of ERP systems. The effective use of TQM helps companies obtain the maximum return on investment. TQM Strategy implementation will result in reducing the cost of ERP implementation and will give a solid foundation of required enhanced human capacities and capabilities, conducive organizational culture, optimal utilization of all resources and improved processes. This will facilitate the change and transformation in an organization and enable them to move towards Business Excellence. Bibliography: This research paper has been taken from

http://mitiq.mit.edu/iciq/PDF/RELEVANCE%20OF%20TOTAL%20QUALITY%20MANAGEME NT%20(TQM)%20OR%20BUSINESS%20EXCELLENCE%20STRATEGY%20IMPLEMENTATI ON%20FOR%20ENTERPRISE%20RESOURCE%20PLANNING%20(ERP)%20A%20CONCEPT UAL%20STUDY.pdfon 08/08/2011 at 09:40 P.M.

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Value Creation in E-Business

Raphael Amit & Christoph Zott Summary: The main aim of the research paper is to explain that the established firms are creating new online businesses, while new ventures are exploiting the opportunities the internet provides. E-business has the potential of generating tremendous new wealth, mostly through entrepreneurial start-ups and corporate ventures. One would thus expect e-business to have attracted the attention of scholars in the fields of entrepreneurship and strategic management. Some theories are related to the value creation in E-Business we focuses on value chain analysis, Schumpeterian innovation, the resource-based view of the firm, strategic network theory, and transaction cost economics. Each theoretical framework discussed above makes valuable suggestions about possible sources of value creation. The authors believe that this reinforces the need for an identification and prioritization of the sources of value creation in E-Business. Each theoretical framework discussed above makes valuable suggestions about possible sources of value creation. Many of the insights gained from cumulative research in entrepreneurship and strategic management are applicable to E-business. However, the multitude of value drivers suggested in the literature raises the question of precisely which sources of value are of particular importance in e-business, and whether unique value drivers can be identified in the context of ebusiness. The authors have also drawn attention to the fact that each theoretical framework that might explain value creation has limitations when applied in the context of highly interconnected electronic markets.

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The rapid pace of technological developments coupled with the growth of e-businesses gives rise to enormous opportunities for the creation of new wealth. There has been an attempt by the authors to contribute to theory development by investigating the theoretical foundations of value creation in E-business. The focus of this paper is on new wealth creation, which has occupied much of the entrepreneurship literature. This paper is a first step in attempting to understand the strategic issues faced by e-business firms in the emerging context of the Internet. It raises a number of interesting and challenging paths for future research including such questions as: (1) What are the sources of competitive advantage in online markets versus offline markets? (2) Are strategy perspectives and tools that were formulated based on a competitive landscape inhabited by offline firms still relevant in the new world of e-business? The paper suggests that the emergence of virtual markets opens new sources of innovation (e.g., business model innovation) that may require a parallel shift in strategic thinking towards more integrative, dynamic, adaptive, and entrepreneurial strategies. Bibliography: This research paper has been taken from http://www.uazuay.edu.ec/bibliotecas/e-

business/Value_Creation_in_E-Business.pdf on 08/08/2011 at 09:55 P.M.

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The Consumers Process of Value Creation

Ravald Annika Objective:
The purpose of this paper is to analyze value creation from a consumer perspective. The aim is to learn how value emerges for the consumer. Methodology: The conclusions are based on a synthesis of evidence from literature studies in marketing and axiology as well as empirical research in the automobile industry. The empirical study follows a longitudinal qualitative research approach and consists of 44 in-depth personal interviews with 32 informants. Summary:

The purpose of this paper is to analyze value creation from the customers perspective with an aim to learn how value emerges for the customer. The author provides empirical findings on customer value and value creation and adds to the present knowledge on value and value creation. The findings show that value for the customer emerges in a variety of activities related to use and ownership, but that use and ownership are not equivalent to value creation as value does not always emerge. Based on the findings from empirical and theoretical sources, the author concludes that value could be defined as a positive emotional response and it is proposed that market offerings and relations to service providers do not contribute to the customers process of value creation until a personal meaning has been ascribed to them by the customer. Conclusion:

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Value for the consumer emerges in a variety of activities related to use and ownership. The findings however show that use and ownership are not equivalent to value creation. The findings from this empirical study also reveal that the service providers role in all phases of the consumers process of value creation not can be taken for granted.

Bibliography:

http://www.naplesforumonservice.it/uploads//files/RAVALD_THE%20CONSUMER%5C%27S %20PROCESS%20OF%20VALUE%20CREATION.pdf on 08/08/2011 at 10:33 P.M.

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Importance of Technological Innovation for SME Growth

M. H. Bala Subrahmanya, M. Mathirajan & K. N. Krishnaswamy

Objective:

To ascertain the growth rates of sales turnover, investment, and employment of innovative SMEs and non-innovative SMEs. To probe the relationship between innovation and growth of sales turnover of SMEs.

Methodology: A semi structured questionnaire containing 60 questions related to charactestics of SME was prepared. The validity and reliability of the questionnaire was ensured and based on the knowledge and experience of the authors, discussions held with industry experts and representatives of SME associations. A pilot study was also done on 10 enterprises of each of the sector. In the absence of official database, the authors relied on databases of SME association. They analysed innovative SMEs using correlation analysis, analysis of variance (ANOVA), and regression analysis. Summary:

Small and medium enterprises are considered as the driving force in the modern economies due to their contribution in technological innovation, employment generation and export promotion etc. This ability of SMEs to innovate gives competitive edge to the firm, industries and economies. Technological innovation is unavoidable for firms who want to develop and maintain
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a competitive advantage or gain entry in new market. It is easy for these firms to innovate because they are more flexible, adapt better themselves and are better placed to develop and implement new ideas. Technological innovation a firm should have technically qualified manager, technically skilled employee and market demand for the innovative product. These small firms explore new product ideas and most frequent way of achieving this includes contacts with customers and close analysis of competitors are the major drivers of innovation. Through technological innovations, SMEs intend to achieve either cost effective, quality improved, improved versions of existing products, or altogether new products. It was observed that the contribution of innovated new products was more to total sales than to profits. a significant relationship between the share of innovative sales and sales turnover change of firms was detected. It was observed that there is a strong association between innovation and turnover growth. It was found that innovation helped SMEs to improve their performance in terms of market share and diversified range of goods and services.. But all this is relevant to industrialized countries and therefore their relevance to India might be questioned. Their size characteristics revealed that size structure of the SMEs was more skewed towards micro and small enterprises than towards medium sized enterprises. SMEs are generally known for informal innovations. A greater proportion of SMEs in the auto sector is innovative relative to electronics and machine tool sectors. A higher percentage of innovative SMEs have succeeded in converting their innovations into sales in the auto component sector relative to electronic and machine tool sectors. If innovative SMEs are able to convert their innovations into sales, they might be able to increase their sales turnover and increase capacity utilization or energy utilization or manpower utilization or improve inventory management or enter the international market. More than half of the innovative SMEs have achieved sales growth due to their innovations. In the electronics

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sector, non-innovative SMEs registered negative growth in terms of investment and employment. Overall, the growth analyses for the three sectors clearly indicate that innovative SMEs are better off relative to no innovative SMEs. The correlation results indicate that there is indeed a statistically significant positive correlation (at 0.01 levels) between sales growth and percentage of innovation sales in total sales. The results clearly indicate that the percentage share of innovated products in total sales has a significant influence on the average rate of growth of GVA in innovative SMEs in all the three sectors. With a one percent improvement of innovated products in total sales, the rate of growth of GVA is likely to improve by 0.50 per cent. However, equally important is the increase in capital as well as labour. Thus if an innovative SME could expand the scale of production in terms of capital and labour and achieve an increase in innovation sales, it will be able to experience a significant improvement in the growth of GVA. This enables us to conclude that innovation sales do contribute to firm growth in terms of GVA.

Conclusion:

A substantial proportion of SMEs in all the three sectors are innovative, mostly informally. Most of the innovative SMEs attributed the origin of their innovations to a combination of (i) firm level technological capability and (ii) market pressure due to external factors. Thus, both technology push and demand pull have contributed to the emergence of innovations. The major objective of SME innovations was enhancement of competitiveness in the form of quality improvement, cost reduction, extension of product range and replacement of phased out products, apart from penetrating the international market. To conclude, our overall analysis lends substantial credence to the argument that innovation contributes to the growth of firms.

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Bibliography: This research paper has been taken from www.merit.unu.edu/publications/wppdf/2010/wp2010007.pdf on 08/08/2011 at 10:22 P.M.

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