Measurement of Innovation Capacity in Small and Medium Manufacturing Companies

Organizations are unique because of their ability to innovate and create competitive advantages. This ability is intangible by nature. Therefore, it cannot be measured directly but by evaluating dimensions closely related to innovation processes and results. The research calculates innovation capacity (IC) by considering organizational, knowledge, and functional measurements. Sixty-one small and medium companies (SMEs) from the metal-mechanic sector in the Ecuadorian industry participated by defining indices by size through analysis of non-linear components. This allows us to understand the quantification of this capacity in the companies analyzed. The results are verified by a panel of experts from the sector, limiting the ability for innovation to depend on the size of the company and the generation in which they are located. There is variability in the IC among the SMEs in the sector, and a reduced group registers a high IC index. The functional dimension denotes greater strength as a contribution to IC, highlighting the factor of innovation in processes and marketing. In the organizational size, the innovation strategy and leadership are positive and require improving the corporate culture and structure. More significant efforts are needed to generate new knowledge and to strengthen the dissemination and application in the knowledge dimension. The adequate articulation of the dimensions that integrate the IC will improve SMEs’ competitiveness.