Interlocking gears form a euro tree, illustrating growth through partnership.

Unlock Innovation: How Strategic Partnerships Fuel Growth for Traditional Manufacturers

Reese Marlowe in Business & Economy August 2025 • 4 min read.

"Discover how European SMEs are leveraging cooperation to drive technological and non-technological advancements, boosting their competitiveness in today's market."

In today's rapidly evolving industrial landscape, marked by increasing globalization and technological advancements, innovation stands as a critical pillar for sustained growth and competitiveness. The European Commission has emphasized the importance of innovation, particularly within small and medium-sized enterprises (SMEs) operating in traditional manufacturing industries. These industries, while often overlooked in favor of high-tech sectors, remain vital to employment and economic stability across the European Union.

A recent study delves into the impact of strategic cooperation on innovation among European SMEs in traditional manufacturing. This research, conducted across seven EU regions and encompassing six key industries, investigates how collaboration with external organizations influences both technological (product and process-related) and non-technological (organizational and marketing-related) innovations. The study further examines how these partnerships contribute to the commercial success of product and process innovations, measured by innovative sales.

The study highlights that SMEs innovate differently than larger firms because of their limitations of resources. By strategically choosing cooperation partners, SMEs can access a wide array of external resources and knowledge. This cooperation results in increased innovation and greater commercial benefits. This article explores the findings of this study, providing actionable insights for SMEs looking to enhance their innovation strategies through cooperation.

Why Strategic Cooperation Matters for SMEs

Interlocking gears form a euro tree, illustrating growth through partnership.

The research underscores the vital role that cooperation plays in driving innovation for SMEs in traditional manufacturing. The study reveals the broad benefits of external collaboration, such as risk and cost sharing, reduced innovation time, fast commercialization of products, access to resources, and external knowledge. This helps to address hampering factors such as limited human and financial resources that often affect SMEs.

Drawing upon transaction cost economics and the resource-based view of the firm, the study suggests that companies engage in cooperative relationships to gain access to resources that would otherwise be too costly or difficult to obtain internally. These relationships often act as substitutes for internal capabilities, allowing companies to scale more efficiently and diversify their operations.

Access to Diverse Knowledge: Cooperation helps SMEs access a broad spectrum of knowledge, insights, and expertise that might not be available internally.
Resource Optimization: Sharing resources and costs with partners reduces the financial burden and risks of innovation.
Market Expansion: Collaborations can facilitate faster commercialization and market entry for new products and services.

Furthermore, the study emphasizes the importance of absorptive capacity, highlighting that SMEs must develop internal capabilities to effectively leverage external knowledge. This involves fostering a culture of learning and development, promoting internal expertise, and establishing mechanisms for knowledge sharing and integration.

Takeaway: A Portfolio Approach to Innovation

The study delivers a clear message to SME owners and managers: adopt a portfolio approach to cooperation to enhance innovation performance. This strategy emphasizes the importance of cultivating diverse and extensive cooperative networks. This approach can encourage innovation and help with commercialization.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1142/s1363919619500464, Alternate LINK

Title: Cooperation For Innovation And Its Impact On Technological And Non-Technological Innovations: Empirical Evidence For European Smes In Traditional Manufacturing Industries

Subject: Management of Technology and Innovation

Journal: International Journal of Innovation Management

Publisher: World Scientific Pub Co Pte Lt

Authors: Dragana Radicic, David Douglas, Geoff Pugh, Ian Jackson

Published: 2019-05-29

Everything You Need To Know

What is the primary benefit of strategic cooperation for SMEs in traditional manufacturing, as highlighted by the study?

The study underscores that strategic cooperation allows SMEs in traditional manufacturing to overcome resource limitations and drive innovation. By forming partnerships, SMEs gain access to a wide range of external resources and knowledge, crucial for both technological (product and process) and non-technological (organizational and marketing) advancements. This collaborative approach facilitates risk and cost sharing, reduces innovation time, accelerates product commercialization, and ultimately enhances competitiveness in the evolving industrial landscape. Furthermore, strategic cooperation supports market expansion and provides access to knowledge that might not be available internally, as per the research findings.

How does strategic cooperation contribute to the commercial success of product and process innovations for European SMEs?

Strategic cooperation significantly boosts the commercial success of product and process innovations for European SMEs, as revealed by the research. It facilitates faster commercialization of new products and services by leveraging the resources and expertise of partners. This accelerated market entry is a direct result of the benefits derived from cooperation, such as shared resources, reduced innovation time, and access to external knowledge. The study's focus on innovative sales as a measure of commercial success shows that partnerships directly enhance the ability of SMEs to bring new products and processes to market effectively, thereby driving revenue and growth.

What is the role of 'absorptive capacity' in the context of SMEs engaging in strategic partnerships?

In the context of strategic partnerships, 'absorptive capacity' is crucial for SMEs. It refers to the ability of an SME to recognize the value of new, external information, assimilate it, and apply it to commercial ends. The study emphasizes that SMEs must develop internal capabilities, like a culture of learning, internal expertise, and knowledge-sharing mechanisms, to effectively leverage external knowledge gained through cooperation. Without strong absorptive capacity, the benefits of accessing diverse knowledge through partnerships may be diminished, as SMEs may struggle to integrate and utilize that knowledge effectively.

Can you explain the different types of innovation that strategic cooperation influences, as mentioned in the study?

The study highlights that strategic cooperation impacts both technological and non-technological innovations within European SMEs. Technological innovations encompass product and process improvements, directly affecting the goods produced and the methods used to create them. Non-technological innovations include organizational and marketing advancements. Organizational innovation involves changes in business structures and practices, while marketing innovation focuses on new ways to promote and sell products. Cooperation allows SMEs to improve in all these areas, leading to a more comprehensive approach to innovation and enhancing their overall competitiveness.

What are the key takeaways for SME owners and managers looking to boost innovation through strategic partnerships?

For SME owners and managers, the main takeaway is to adopt a portfolio approach to cooperation. This involves building diverse and extensive cooperative networks to enhance innovation performance. The study emphasizes the importance of cultivating a range of partnerships to access a variety of external resources, knowledge, and expertise. By strategically choosing cooperation partners, SMEs can overcome resource limitations, reduce innovation time, and accelerate product commercialization. This comprehensive approach not only encourages innovation but also directly supports the commercial success of new products and services in the market. This portfolio approach, along with enhancing the absorptive capacity, is vital for SMEs to succeed.