A measure of enterprises' innovative activity for microfirms and startups

Presently knowledge represents a major factor for the development of a country's economy. Although several methods exist to measure a broad range of entrepreneurial intentions and entrepreneurial activities on the national and international level, it should be emphasized that evaluating the level of innovativeness (innovation degree of the product and/or innovation level of the management) is a research challenge tackled by public statistical services and private research institutions. Whereas the topic is relevant for research and practice, prior papers in the literature are limited. Therefore, there is a real need for examining startup ecosystems, which constitute the most dynamically changing legal entities, and have an increasing impact on the economy. Startup mentoring has received a special attention lately in developing countries, such as Ecuador, owing to continuously increasing governmental and private initiatives. In this study we analyze the innovative activity of enterprises enrolled in the Co-working StartUPS mentor program, in Ecuador. The concept of innovative performance introduced by Hagedoorn & Cloodt considers the number of patents awarded to companies. In present, the number of new products introduced to the local and international market is low (only 1.3% of local companies developing new products launch their manufactured goods on the market), and the number of patents owned by Ecuadorian microenterprises and startups is negligible. Therefore, we attempt to develop a new measure for assessing the innovative activity of local startups. For companies registered at the Co-working StartUPS mentor program we try to answer the question how innovative activity impacts the success of startups with constant monthly revenue. A straightforward critical success factor has been calculated by dividing the monthly revenue with the number of employees working at the startup. Next, the level of management's innovativeness and degree of product's innovativeness were determined. Finally, we calculated the total innovative activity using a self-developed index. In addition, we performed correlation analysis between the intellectual activity and the critical success factor.