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Understanding the dynamics of strategic marketing and innovation is key to MSME growth, shows study

When India’s emerging market bubble had burst by 2014, the government launched the “Make in India” initiative to resuscitate the micro, small and medium enterprises (MSMEs) and popularize entrepreneurship. The initiative would provide skills and create jobs for the workforce while looking to make India a manufacturing hub with modern laws and policies that aid investors and entrepreneurs. In India, MSMEs are the second largest employer and about 12 million people are expected to join the workforce in the next three years. However, this sector is facing a lot of challenges like technological obsolescence, supply chain inefficiencies, increasing fund shortages among others. Now, a new study by the Department of Management Studies at the Indian Institute of Science, Bangalore, has provided some interesting aspects of performance of MSMEs. “Our work studies the role of strategic marketing and innovation to improve the performance of MSMEs and its contribution to the economic development of the country as a whole”, says Mr. Lohith C.P., one of the research team members.

MSMEs are the backbone of any developing nation’s economy. It encompasses a wide spectrum of enterprises in terms of capital, goods and services production, use of technology and geographical locations. The sector currently contributes to 38% of India’s GDP and 40% of India’s exports with 8000 products manufactured by around 26 million enterprises, employing 59 million people. The hope of economic equality through productive employment for millions is the most obvious benefit on offer from this sector. However, the range of the sector also makes it unorganized, difficult to study and to steer. For MSMEs to survive with challenges like access to funds, skilled labour, increasing local and global competition and rapidly changing market scenarios, there is imperative need to adopt innovative approaches in their regular business operations.

The unorganized nature of the MSME sector makes it difficult to collect data on a range of subjects. The study considered various aspects of marketing strategies employed by the MSMEs, either formal or informal, and tried to measure its impact on the innovation capacity of the enterprise. Innovation covered a broad spectrum of product, process, system, technological, incremental and radical innovations. Data about these aspects were collected through questionnaires from sample MSMEs and statistical analysis was performed to determine the reliability of the assessment.

“In the manufacturing sector, we find that MSMEs are unable to focus themselves in the present competition”, points out Prof. R.Srinivasan, a senior distinguished professorat the Department of Management Studies, IISc. However, empirical data that lucidly presents the interrelationships and effects of these phenomena is key to creating an economic environment in which the government, financial institutions, venture capitalists and the enterprises themselves, are all equally invested in nurturing this sector. “Data from studies such as ours can provide much needed direction to the governments and financial institutions to streamline their policies, for enterprises to streamline their strategies, and for venture capitalists to invest their resources in the most efficient way”, adds the professor.

The current study only just scratches the surface of the intricate factors that play a role in the growth of MSMEs. Additional statistical models to quantify the effects of marketing strategies on the capacity of enterprises to innovate and vice versa can further analyze the exact the nature of the interrelationships. Such studies can come up with suggestions to help MSMEs adopt strategic marketing that can not only help survive, but also increase performance in the competing marketing conditions.

About the authors:

Prof. R. Srinivasan is a senior distinguished Professor of Marketing & Strategy, Department of Management Studies, Indian Institute of Science. He has more than 35 years of experience in both academia and industry. His current interests are in developing strategic policy initiatives and strategic marketing.



Mr. Lohith C.P, Research scholar in the Department of Management studies, Indian Institute of Science. He is also an Assistant Professor in the Department of Mechanical Engineering, Siddaganga Institute of Technology, Tumakuru and has more than 15 years of experience in both academia and industry.



About the Research:

The paper was published 2015 Portland International Conference on Management of Engineering and Technology (PICMET) and can be accessed at