Abstract:
Small and Medium Enterprises (SMEs) in New Zealand are subject to immense global competition from low cost manufacturers in the developing countries. Therefore, to stay competitive, SMEs in New Zealand need to continually innovate in a strategic manner. However, these SMEs face a number of barriers that hinder their innovative capability which in turn limits their competitiveness. This research study identified a small manufacturing company, named Felton Industries Ltd, which has proven to be innovative and strategic. As a result it has managed to stay competitive amongst vast global and local competitive pressures. One outcome of such innovative thinking was the development of a novel leak testing system to replace the traditional one. The purpose of the implementation was to strategically improve business. This research study used findings from the literature along with participative action research to identify the drivers and barriers of innovation along with studying about Felton's strategic approach to business development. The researcher was embedded into the organisation with the responsibility of developing the new leak testing system according to the strategic goals developed by Felton. This situation allowed the researcher to gain an insider's view about the factors mentioned above. Information was collected through the researcher's personal observations, interactions with the staff and interviews with the general manager. This research study resulted in the development of a semi-automated leak testing system that satisfied Felton's strategic goals. It also resulted in the identification of the structured strategic approach to business development practised by Felton. The barriers to innovation were identified as lack of financial resources and lack of active technology scanning. The drivers of innovation were identified as strategic approach to business development, participative and decentralised leadership, organic company culture and effective knowledge management. These factors collectively have helped Felton succeed in a highly competitive market.