Inertia, Innovation Failures, and Learning from Innovation Failures: Some Insights from MSEs in an Emerging Market Economy

It is widely accepted that inertia may inhibit small businesses’ innovation and growth. However, little is known as to why some small businesses experience inertia and how this relates to innovation failures and learning from such failures. The objective of the present study is to examine inertia, innovation failures, and learning from innovation failures through the lens of micro and small enterprises. Micro and small business enterprises have been seen as informal ways of doing business without a formal institutionalization. As an emerging market economy, Indonesia sets an exemplary context that may enrich our understanding of institutional inertia. This study uses a qualitative approach by interviewing 25 small business owners in West Sumatra, Indonesia. The data were analyzed by using thematic analysis. It was found that most interviewees failed to learn from their failures because of their incapability to institutionalize business strategies. Nevertheless, some patterns emerged, and they present clues leading to innovation failures and lessons to be learned, which in turn, reduce inertia. The present study offers some propositions that capture the essence of the issue, which can be used for future research.