Creating Environment Opportunities for New Market Innovation in Developing Economies: A Synthesis, Framework and Research Propositions

Abstract

There is the lack of framework for understanding the external factors influencing innovation by Small Medium Sized Enterprises (SMEs) in Knowledge-Intensive Business Services (KIBS) sector in developing economies. KIBS are private innovative firms that manage knowledge acquired from the environment to provide customised proficient service solutions to client firms.  However, a better understanding of such external factors is important for the development of this sector for sustainable economic growth. This study is posited on the institutional theory by recognising the role of formal and informal knowledge institutions in the environment as sources of acquiring knowledge resources for KIBS innovativeness. This theoretical paper therefore develops a framework that consists of the distinctive formal and informal institutions that can influence KIBS SMEs innovation in developing countries. The scope of the study is Sub-Sahara Africa, original propositions that KIBS in developing countries can flourish in new market innovation if they maximize the use of external institutional services for knowledge resources, which can be subjected to future empirical research. Certain suggestions that government should develop informed policy to enhance knowledge networking infrastructure across the formal knowledge institutions is made. Research implications of the framework developed are discussed at the end of the paper. This study contributes originally to literature in entrepreneurship in developing economies.