Productivity improvement of manufacturing SMEs via technology innovation in Korea

The competitive strength of small and medium enterprises (SMEs) based on technological innovation is one of the most important managerial strategies for holding a dominant position under the fierce global competition. in this study, a decision tree is used to grasp SMEs' innovation activities hierarchically for technological innovation, where the increase of annual productivity rate is used as a proxy target variable for innovation while SMEs' various innovative activities are used as explanatory variables in the form of information acquisition, technological cooperation, technology acquisition, government support, patenting, and compensation. Based on the results of our decision tree analysis, we suggest some insightful strategies for successful innovation of SMEs. It is expected that our study can provide a means for improvement of productivity based on technological innovation.