Incremental and Radical Innovations that Contribute to the Survival of Small Businesses in Environments of Crisis

Abstract

This paper examines the influence of incremental and radical innovations on the survival capacity of micro and small companies (MSE) in contexts of economic crisis.

State of the art on innovation points to a lack of a specific methodology to segregate incremental and radical innovation in MSEs. Identifying such a method allows for action to promote innovation in such more assertive companies, contributing to the survival of companies in the most adverse moments, such as crises.

In this sense, a methodology was developed to identify the type and degree of innovation based on the level of innovation in the sector of activity and was applied to a sample of 60 companies in the textile retail sector. The dependent variable was business survival, measured by the continuity or cessation of activity in 2020. The estimate of the probability of survival was carried out using a binary logistic regression model.

The dimensions of incremental innovation, which are the most common in the business environment, did not significantly affect survival. The dimensions of radical innovation, which imply deeper and more disruptive changes in the business model, had a positive impact. significant impact on survival in all cases. The most complex actions in the Solutions dimension increased the chances of survival by 42%; improving Processes by 39%; and innovation in the Square by 38%. These findings suggest that small businesses that adopt radical innovations have greater adaptability and resilience to adverse situations.