sustainability

Article
Small and Medium-Sized Enterprises (SMEs):
The Engine of Economic Growth through
Investments and Innovation
S, tefan Cristian Gherghina 1, * , Mihai Alexandru Botezatu 2 , Alexandra Hosszu 3 and
Liliana Nicoleta Simionescu 1
1 Department of Finance, The Bucharest University of Economic Studies, 6 Piata Romana, 010374 Bucharest,
Romania; [email protected]
2 Department of Informatics, Statistics and Mathematics, School of Computer Science for Business
Management, Romanian-American University, 1B Expozitiei Blvd, 1st District, 012101 Bucharest, Romania;
[email protected]
3 Doctoral School of Sociology, University of Bucharest, 36-46 Mihail Kogălniceanu Blvd, 050107 Bucharest,
Romania; [email protected]
* Correspondence: [email protected]; Tel.: +40-741-140-737

Received: 16 November 2019; Accepted: 23 December 2019; Published: 1 January 2020

Abstract: Small and medium-sized enterprises (SMEs) are crucial for local economic development,
playing a noteworthy role in job creation, poverty alleviation and economic growth, but they
encounter many funding barriers. The purpose of the current paper is to investigate the impact of
investments and innovation on territorial economic growth, as measured by turnover, for Romanian
active enterprises, especially SMEs, over the period 2009–2017. By estimating several log–log linear
regressions, the quantitative outcomes provide support for a positive influence of investments on
turnover. The association was confirmed both for all active enterprises at the national level, as well as
for micro, small, middle-sized and big companies. As regards expenditures on innovation, a positive
impact on turnover was acknowledged for all enterprises and particularly for big companies, but there
was an absence of any statistically significant relation in the case of SMEs. The impact of firm size on
turnover was positive for all active enterprises at the national level, along with active micro-units.
Also, the estimation results show a positive impact of the number of active micro-units on territorial
economic growth. The empirical findings are relevant to managers and policymakers in order to
stimulate, encourage and offer support to SMEs’ development through their strategies.

Keywords: SMEs; turnover; investments; innovation; competitiveness; regression analysis

1. Introduction
Small and medium enterprises (SMEs) are a noteworthy driver of economic development [1],
being vital to most economies across the world, particularly in developing and emerging nations [2].
They represent 99% of all businesses in the European Union (EU) and in the last five years, provided
about 85% of new jobs, also ensuring two-thirds of the total private sector engagement in the region [3].
For instance, in 2015, there were about 23 million SMEs that provided 90 million jobs, generating a higher
added value of 3.9 billion EUR [4]. Different to large corporations, SMEs are highly flexible, revealing a
superior flexibility to technical shifts, higher promotion of income distribution and better adaptability to
fluctuations in the market and new customer requirements, while their organizational structure allows
for quicker decision making [5]. Nevertheless, to achieve this potential, SMEs need a continued source
of longstanding funding so as to invest in growth opportunities [6]. Hence, wishing to strengthen the
entrepreneurial spirit in Europe and to create conditions for the practical development of innovative

Sustainability 2020, 12, 347; doi:10.3390/su12010347 www.mdpi.com/journal/sustainability

Sustainability 2020, 12, 347 2 of 22

concepts, the European Commission designed a set of measures alongside a modern and coherent
policy for SMEs. The main purpose of this plan is to support the growth and development of SMEs in
close relation to the employment market [7]. SMEs are viewed as the backbone of an economy [8] since
they exert a significant role in lessening poverty, employment creation, foreign trade promotion and
technique innovation [9], also contributing meaningfully to the growth of developing economies [10].
So, the strategy adopted in 2008 for Europe via the “Small Business Act” considers the application of the
principle “First, think at a small scale” [11] regarding the adoption of policies, regulations and policy
measures that should offer support to the needs of SMEs. Since 2010, the European Parliament has
adopted a series of resolutions, such as: community policy to stimulate innovation through European
SMEs [12], industrial policy for globalization conditions [13], the competitiveness issue and the issue of
business opportunities in the European Union [14], the re-industrialization of the economy to provide
competitiveness and sustainability [15], supporting information and communications technology (ICT)
development regarding the transition towards a type of sustainable economy and the resolution of
social and ecological problems mentioned in the European Strategy 2020 [16], easy access for SMEs
towards financing possibilities [17] and the stimulation of research/development and innovation
processes offered by the research program Horizon 2020 [18,19]. Thus, through European and national
policies, and through start-up financing programs or business incubators, SMEs have been encouraged
and stimulated to develop, grow and support the economy and local, regional and national activities
within communities.
Since markets have become gradually more competitive, SMEs attempt to assert themselves via new
product advances in order to compete with large enterprises. Hence, innovation plays a fundamental
role in accomplishing competitive power [20], being oriented towards novel products, original
marketing and management methods, as well as genuine technologies [21]. The model of Porter [22,23]
promotes the idea that enterprises belong to a greater globalization and internationalization process.
Competitive advantage is created and supported locally within a national or regional area, each having
its own economic or cultural characteristics. The European Commission defines a competitive region
as one that is able to “ensure both the number and the quality of jobs” [24]. Regarding this description,
the gross domestic product (GDP)/inhabitant is considered to be a proper representation. It can be
deconstructed into more components with precise economic interpretations [25].
The idiom “regional competitiveness” is a phrase that refers neither to macroeconomy nor to
microeconomy because regions can be considered neither simple accumulations of enterprises from a
certain area, nor reductions of a certain nation to a smaller scale. Therefore, it can be considered that
the regional level is much more complex and challenging to analyze. Regions are in direct competition
with each other for the conquest of markets and for attracting investments [26]. Hence, one region may
possess absolute competitive advantages if these include technological and social factors concerning
infrastructure or superior institutional factors compared with other regions, which are external to
enterprises, but which contribute to their development and greater success.
This paper aims to investigate the role of active enterprises, especially SMEs, in territorial
development in Romania, as measured by their turnover. Previous studies on SMEs’ access to
finance and their innovative capacity have focused on various states such as Albania [27], Brazil [28],
Poland [29–32], Romania [21,33–38], Spain [5,39], Malaysia [40], Middle Eastern and Central Asian
states [41], Nigeria [1], Portugal [42], United States [43], Vietnam [44] and Zimbabwe [45]. Nevertheless,
preceding research for the Romanian case has focused on topics such as the involvement of SMEs in
economic growth [38], the role of SMEs in improving employment [37], SMEs’ financing options [36],
the influence of globalization on SMEs [35], the sustainability of SMEs [33] as well as their importance [34]
or innovative capacity [21]. Our research contributes to the existing literature in a number of ways.
First, we focus on SMEs in the context of an upper-middle-income nation. The fruitful evolution of
central and eastern European nations from planned economies to market-oriented economies would
not have been feasible without the enlarged number of SMEs [30]. Studies of this type are rare due to
the predilection for exploring firms that are larger, more productive and more capital intensive [44].
Sustainability 2020, 12, 347 3 of 22

However, another particularity is that most developing markets feature a bank-based formal financial
system with frail equity and debt markets [46], alongside a lack of innovation management experience
and state-of-the-art technology [47]. Due to the inheritances of central planning, the growth of
SMEs is severely inhibited by their restricted access to finance [48]. Second, the paper advances the
literature by providing empirical evidence for the impact of investments and expenditures related to
innovation on territorial development in Romania, which to the best of our knowledge has not been
explored previously.
The paper is structured as follows. Section 2 examines the previous literature and establishes the
research hypotheses, while Section 3 is dedicated to the empirical framework. Section 4 outlines and
discusses the quantitative outcomes. The last section provides final remarks and policy implications.

2. Theoretical Backgrounds, Literature Review and Hypotheses Development

2.1. Prior Research on SMEs Financing

SMEs play an ever more imperative role towards market evolution locally and overseas, influencing
sustainable growth in the trading, production and service areas via attracting investments [31].
According to Kersten, et al. [49], SMEs funding plans reveals a positive significant effect on the total
volume of financing and/or investment, firm performance and employment. With reference to the
theories that enlighten the factors driving firm investment, the acceleration principle theory [50]
postulates that companies increase their investments during satisfactory stages of economic growth,
whilst investments are reduced during economic recession. According to neoclassical theory [51],
firms increase investment if sales increase, but investment diminishes if sales fall.
SMEs are oriented towards profit maximization rather than expansion since their legal status
is commonly proprietorship or partnership, these companies being ruled by the resolutions of
owners. Owners employ their own assets to fund their businesses, considering profits more vital than
investments [52]. Wellalage and Fernandez [46] documented that having formal finance is positively
related to firm-level product innovation and process innovation. However, SMEs are challenged with
serious financial limitations when compared to listed firms since they cannot increase funds by issuing
stocks and bonds, thus bank borrowing is the core source of funding [53]. Besides, scarce collateral,
weak solvency, short/no credit history, immature bank-borrower dealings, high transaction costs and
information asymmetry were noticed as the main difficulties with reference to gathering commercial
bank financing, particularly long-term borrowings [43]. Wang [54] exhibited the most significant
impediments observed by SMEs managers, namely “access to finance”, “tax rate”, “competition”,
“electricity” and “political factors”.
Ullah [48] noticed that SMEs encounter lesser financial restraints in nations with higher levels
of GDP per capita, stock market development, legal systems and property rights, besides reduced
levels of corruption. Motta and Sharma [28] confirmed that firm size may affect access to capital in the
hospitality SME sector as small-sized companies may not own high-quality projects required to acquire
bank credits from financial intermediaries. In this vein, Jackowicz and Kozlowski [32] proposed that
social ties amongst SMEs managers and bank employees may enhance SMEs’ access to bank financing
and rouse their investments.

Hypothesis 1a. The turnover of all active enterprises at the national level is determined by the investments
performed by these firms and their numbers of employees.

Hypothesis 1b. The turnover of all active companies at the national level is driven by the gross investments
performed by these enterprises.

Hypothesis 1c. The turnover of all active firms at the national level is determined by the gross investments
performed by these companies, investigated according to business size.
Sustainability 2020, 12, 347 4 of 22

Hypothesis 1d. The turnover of all the micro-enterprises at the national level is driven by the net investments
performed by these companies, the number of active micro-units and the number of employees.

2.2. Previous Studies on Innovation in SMEs

In a globalized era—a society based on knowledge, respectively—the SMEs reveal exclusive
competitive returns on the strength of flexibility and quick adaptation to the new requirements of
production and global market, exposure to new industrial know-hows [55,56], the ability to identify and
to apply the value of novel external information [57], the power to speedily adopt the modern techniques
and technologies for new business models [58], the rapid decision and the lack of bureaucracy in the
process of implementing new products and innovative processes [59]. As such, a crucial role in shaping
a competitive benefit is revealed by innovation [29]. Exposito and Sanchis-Llopis [39] noticed that
innovation of any type (product, process and/or organizational) positively influences financial and
operational extents of SME performance. As well, The Organisation for Economic Co-operation and
Development (OECD) [60] reinforced that higher levels of firms’ investment in innovation determine
higher innovation sales and productivity.
The competitiveness regarding a company refers to “the capacity of producing proper goods and
services of eligible quality, at the right price and at the right time” [61] or “the capacity of companies to
compete, to develop and to increase profits” [62]. Also, competitiveness is viewed as the “dynamic
function that depends on progress, innovation and on the ability to self-change and improve” [23].
Through his pattern, Porter [23] reinforces the idea that, even if the production of globalization takes
place along with the commercial changes, the competitive advantage is created and supported through
a local process. The national or regional area is the one which, through its economic, cultural or
institutional propriety, allows the development of certain economic activities, of specific undergrowth
or branches of activity or not.
Along with the industrial development and the improvement in the knowledge society, the usage
of knowledge had become the new economic important resource, which changes the approach towards
performance and competitiveness completely. The company’s resources support its competitive
advantage [63], and the manager must nowadays analyze the production along with its social
concerns, labor conditions and the value of the local consumption [64]. A new capability of the
entrepreneur regarding the business success is emphasized, regarding the social competence [65],
and the communication manner with the providers and the clients, the promoting strategy and the
usage of proper visual symbols [66].
The practice strategy has proven that within one company competitiveness often requires a
long learning process which, at the local level can be attained through a common effort of all the
universities, research institutions, investors and entrepreneurs by creating and developing certain
powerful networks [67] with the purpose of reinforcing some new technologies and by creating some
business incubators [68] that might support the local innovation process. However, competitiveness
will be emphasized not only by quality and performance, but also by the plentiful processes within the
company. Amongst these types of processes, the managerial ones are really imperative. Thus, there are
studies [69] that show that the management of SMEs, having solid positions on the market, usually
make more conservative choices of disengagement resources, in order to preserve and strengthen the
actual profit. The experience accumulated on the market and the market feedback is required to build
a strategy appropriate to local conditions.
Innovation represents the process of placing a certain product on the market (goods or services),
a new one or a significantly improved one. Innovation focuses on the cooperation between research
and industry, due to the need for finalizing the research through practical results related to the technical
and technological developments. In Romania, innovation is defined [70] as being both a process and a
product: “innovation—as a product—represents a new function, or the improvement or a broader function of a
certain product, process or service, in any domain, which can or could be available to the demand on the market,
Sustainability 2020, 12, 347 5 of 22

which may or might generate a new type of market; innovation—as a process—represents the activity that
allows the occurrence of innovation. Innovation—as a process—includes the connection between research and
development”. To all the above mentioned, typically, the marketing innovation and the organizational
innovation can be added, offering extremely more development opportunities, that allow the usage of
high technologies and modern informational technologies for structure and management. Likewise,
OECD [71] defines four types of innovation, namely “product innovation—the introduction of a good
or service that is new or significantly improved with respect to its characteristics or intended uses; process
innovation—the implementation of a new or significantly improved production or delivery method; marketing
innovation—the implementation of a new marketing method involving significant changes in product design or
packaging, product placement, product promotion or pricing; organizational innovation—the implementation
of a new organizational method in the firm’s business practices, workplace organization or external relations”.
Saridakis, et al. [72] differentiate amid radical innovation defined as progression in knowledge due to
the advance of novel products and processes that are new to the market/industry and incremental
innovation defined as an unremitting enhancement to products, processes or services that are novel to
the firm only.
The practice has shown that the innovation process of a certain product, service or new performant
technology is inseparably connected to intense research-development activity within companies,
among universities, research institutions and other research entities, experts or scientists within all
domains. By usually working on partnerships for different well-defined projects, implemented and
monitored, these communities include the best professionals in the domain, human resources with
high qualifications and outcomes in the fields, integrated into real scientific communities and able to
reach the best performance. Globalization, the virtual, extremely dynamic market, the technological
development, the computerization and the quick digitization determine the involvement of these
communities even more within economy, social and cultural life at the national and regional level.
This is the only way to withdraw the major differences between nations and regions and amid
companies. As such, the EU determines the general policy, accepted by all the participating countries,
of allocating the amount of 3% of GDP for the activities performed in the research and development
field. The national budgets allocated to research are distributed on research subjects with well-defined
results which are monitored along the entire process. Among all these, the most important ones are the
entrepreneurial and management culture, their capacities of identifying innovation opportunities [73],
to work on a project basis and to identify, diminish or remove the potential risks of the projects [74].
The research and innovation activities include, as a direct result, the increase of jobs, an economic
increase and an increase in the quality of life. The new technologies support the new approach to social
problems such as poverty, poor health and environmental degradation or work safety, since SMEs are
supported by a series of national or regional regulations [75], specially designed as political and social
risk management strategies.
Consequently, the second set of hypotheses are explored:

Hypothesis 2a. The turnover of all active enterprises at the national level is determined by the expenditures on
innovation performed by SMEs and big enterprises.

Hypothesis 2b. The turnover of all active enterprises at the national level is driven by expenditures on
innovation performed by all enterprises.

Hypothesis 2c. The turnover of all active enterprises at the national level is determined by the expenditures on
innovation performed by all SMEs.
Sustainability 2020, 12, 347 6 of 22

3. Data and Methodology

3.1. Sample Description and Variables

The research sample consisted of business statistics-series–business-demography, over the period
2009–2017, the data source shown by the Romanian Statistical Yearbook. The selected variables are
presented in Table 1.

Table 1. Variables’ description.

Variables Definitions
Variables regarding business turnover (Dependent Variables)
TY1A The turnover of all active enterprises at the national level
Y1B The turnover of all the micro-enterprises at the national level
Variables regarding investments (Explanatory Variables)
TX1A1 Total gross investments obtained by all active enterprises at the national level
TX1B1 Total gross investments performed by the micro companies
TX1C1 Total gross investments performed by the small companies
TX1D1 Total gross investments performed by the middle-sized companies
TX1E1 Total gross investments performed by the big companies
X1B2 Net investments performed by micro-enterprises
Variables regarding expenditures on innovation (Explanatory Variables)
TX4A Expenditures on innovation performed by all enterprises
TX4D Expenditures on innovation performed by SMEs
TX4E Expenditures on innovation performed by big enterprises
Variables regarding firm size (Explanatory Variables)
TX3A The number of employees out of all active enterprises at the national level
X3B The number of employees out of active micro-units
Variables regarding the number of enterprises
X2B The number of active micro-units
Source: Authors’ processing.

Consistent with prior studies [2,6,20,32,39,42,48,72], turnover was selected in order to catch the
territorial economic growth, alongside investments [32], firm size [6,28,48,52,72], expenditures on
innovation [47,72] and the number of enterprises.

3.2. Econometric Framework

With the purpose to examine the expressed hypotheses, similar to previous studies [2,32,53],
we estimate ordinary least squares (OLS) regressions. The log–log form is adopted, with MacKinnon–
White (HC2) heteroskedasticity-consistent standard errors and covariance. In order to ensure the same
order of magnitude, the logarithmic transformation was achieved for all the selected variables, except the
net investments performed by micro-enterprises at the national level (X1B2) due to several zero values.
There will be estimated regression equations for each of the settled hypotheses, as depicted below.
Model 1 (M1). TY1A is the selected dependent variable that signifies the turnover of all active
enterprises at the national level. The independent variables are TX1A1 representing the total gross
investments acquired by these companies, alongside TX3A signifying the number of employees.
A model of linear regression is built with two independent variables, β1 , β2 and β3 representing the
Sustainability 2020, 12, 347 7 of 22

parameters of the regression model and εi the disturbance term. The equation of the multiple linear
regression is depicted below:

log(TY1A) = β1 + β2 *log(TX1A1) + β3 *log(TX3A) + εi. (1)

Model 2 (M2). TY1A is the chosen predicted variable that depicts the turnover of all the companies
at the national level. The explanatory variable is TX1A1 representing the total gross investments
performed by these companies. A set of data with 64 values from eight regions of development for a
period of eight years (2009–2016) is considered. A model of linear regression with a single independent
variable is built, where β1 and β2 are the parameters of the regression model and εi the error term.
The equation of the model of the univariate linear regression is described beneath:

log(TY1A) = C(1) + β2 *log(TX1A1) + εi . (2)

Model 3 (M3). TY1A is the elected explained variable that shows the turnover of all the companies
at the national level. The predictor variables are TX1B1, TX1C1, TX1D1 and TX1E1 showing the total
gross investments performed by the micro, small, middle-sized and big companies. A model of linear
regression with four independent variables is estimated, β1 , β2 , β3 , β4 and β5 being the parameters of
the regression model and εi the error term. The equation of the model of multiple linear regression is
shown underneath:

log(TY1A) = β1 + β2 *log(TX1B1) + β3 *log(TX1C1) + β4 *log(TX1D1) + β5 *log(TX1E1) + εi. (3)

Model 4 (M4). Y1B is the selected dependent variable that represents the turnover of all the
micro-enterprises at the national level. The regressors are X1B2 depicting the net investments performed
by these companies, X2B representing the number of active micro-units and X3B measuring the number
of employees. The data series includes 832 values, corresponding to the eight regions of development,
regarding 8 years and 13 sectors of the economy. A model of linear regression is estimated, having
three independent variables, where β1 , β2 , β3 and β4 depict the parameters of the regression model
and εi the disturbance term. The equation of the multiple linear regression model is described below:

log(Y1B) = β1 + β2 *log(X1B2) + β3 *log(X2B) + β4 *log(X3B) + εi. (4)

Model 5 (M5). It is considered that the turnover at the national level is determined by the
expenditures on innovation performed by companies. It is analyzed based on two size categories:
SMEs and big enterprises. TY1A is the chosen regress and that represents the turnover of all the
companies at the national level. The independent variables are TX4D and TX4E that catches the
expenditures on innovation performed by SMEs and big enterprises. The data series includes 24 values,
corresponding to the eight development regions for three years. However, in the Romanian Statistical
Yearbook, the data regarding expenditures on innovation are reported every two years. A model of
linear regression with two independent variables is estimated, β1 , β2 and β3 showing the parameters
of the regression model and εi the disturbance term. The equation of the model of multiple linear
regression is represented below:

log(TY1A) = β1 + β2 *log(TX4E) + β3 *log(TX4D) + εi. (5)

Model 6 (M6). It is considered that the turnover at the national level is driven by the total
expenditures achieved by enterprises. TY1A is established as the dependent variable that signifies
the turnover of all the companies at the national level. The independent variable is represented by
TX4A that measures the expenditures on innovation performed by all companies. A model of linear
regression with a single independent variable is estimated, where β1 and β2 are the parameters of
Sustainability 2020, 12, 347 8 of 22

the regression model and εi the error term. The equation of the model of simple linear regression is
depicted underneath:
log(TY1A) = β1 + β2 *log(TX4A) + εi. (6)

Model 7 (M7). It is considered that the turnover at the national level is determined by the
expenditures on innovation performed by companies. TY1A is acknowledged as the response variable
that catches the turnover of all the companies at the national level. The explanatory variable is TX4E
that measures the expenditures on innovation performed by all SMEs. A model of simple linear
regression with a single independent variable is estimated, where β1 and β2 are the parameters of the
regression model and εi the disturbance term. The equation of the model of simple linear regression is
defined underneath:
log(TY1A) = β1 + β2 *log(TX4E) + εi. (7)

4. Empirical Findings and Discussion

4.1. Preliminary Analysis

The data regarding the total turnover of Romanian enterprises is analyzed further. Table 2
concerns the local active units from industry, construction, trade and other services from the eight
Romanian development regions.

Table 2. Total turnover for the active local units from industry, construction, trade and other services.

Region 2009 2010 2011 2012 2013 2014 2015 2016

1 North-West 85,673 91,222 101,068 106,958 10,8911 115,831 124,021 134,251
2 Center 88,253 95,354 106,679 114,973 119,574 126,904 133,324 143,313
3 North-East 60,414 61,355 67,979 75,897 75,251 77,896 84,512 89,131
4 South-East 86,943 93,476 103,380 115,446 106,792 106,701 110,370 106,377
5 South-Muntenia 97,848 107,136 128,467 132,425 130,652 137,503 138,421 145,959
6 Bucharest–Ilfov 316,201 332,956 360,042 363,868 363,665 381,902 415,115 430,203
7 South-West Oltenia 49,527 50,953 57,426 61,734 59,110 61,177 64,697 66,159
8 West 65,975 70,786 82,110 89,207 91,037 97,804 106,706 117,095
Source: Authors’ processing from the Romanian Annual Statistical Yearbook 2010–2017 National Institute of
Statistics [76].

In line with Table 2 and Figure 1, we notice that for region number six, Bucharest–Ilfov, the one
that includes the capital and the neighboring areas, there is a superior development level compared
to other areas. This may occur probably due to the more attractive business environment, offering
both opportunities for new companies and qualified, trained personnel with great experience in
management, better access to various resources, infrastructure, specialists and links with academics.
The annual turnover for big, active companies at the national level, and the ones accomplished
by SMEs, is reported in Table 3, whereas Figure 2 reveals that the SMEs’ total turnover exceeds the
turnover of big enterprises.
In line with Table 2 and Figure 1, we notice that for region number six, Bucharest–Ilfov, the one
that includes the capital and the neighboring areas, there is a superior development level compared
to other areas. This may occur probably due to the more attractive business environment, offering
both opportunities for new companies and qualified, trained personnel with great experience in
Sustainability 2020, 12, 347 9 of 22
management, better access to various resources, infrastructure, specialists and links with academics.

500000

400000

300000

200000

100000

0
2009 1 2010 2 2011 3 2012 4 2013 5 2014 6 2015 7 2016 8

Figure The total

1. The
Figure 1. total turnover
turnover of
of the
the first
first companies
companies fromfrom the
the eight
eight developed
developed regions.
regions. Source:
Source: Authors’
Authors’
processing from the Romanian Annual Statistical Yearbook 2010–2017
processing from the Romanian Annual Statistical Yearbook 2010–2017 [76]. [76].

Table 3. The turnover of active companies, small and medium enterprises (SMEs) and big enterprises
The Lei).
(mil annual turnover for big, active companies at the national level, and the ones accomplished
by SMEs, is reported in Table 3, whereas Figure 2 reveals that the SMEs' total turnover exceeds the
Year/No. of Employees
turnover of big enterprises. 0–9 10–49 50–249 >250
2009 172,783 209,784 226,239 242,028
Sustainability
Table 3. 2020,
The12, x FOR PEER
turnover REVIEW
of active companies, small and medium enterprises (SMEs) and big enterprises9 of 21
2010 178,450 221,111 236,806 266,871
(mil Lei).
20112011 193,513
193,513 241,214 264,461
241,214 264,461 307,963
307,963
Year/No. of Employees
20122012 0–9
212,861 10–49
212,861 264,998 50–249
267,928
264,998 267,928 >250
314,721
314,721
2009
20132013 172,783 209,784
200,138 258,106
200,138 226,239
258,106 282,285
282,285 242,028
314,464
314,464
2010
2014 178,450
212,025 221,111
276,365 236,806
287,391 266,871
329,936
2014 212,025 276,365 287,391 329,936
2015 2015 217,517
217,517 295,635
295,635 314,397
314,397 349,618
349,618
2016 220,570 303,257 337,667 370,994
2016 220,570 303,257 337,667 370,994
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].

1000000

800000

600000

400000

200000

0
2009 2010 2011 2012 2013 2014 2015 2016

0-249 >250

Figure 2. The turnover of SMEs (0–249 employees) and of big enterprises.

enterprises. Source: Authors’ processing
from
from the
the Romanian
Romanian Annual
Annual Statistical
Statistical Yearbook
Yearbook2010–2017 [76].
2010–2017[76].

Thus,
Thus, it
it is
is proven
proven that
that there
there isis aa greater
greater importance
importance that
that needs
needs to
to be
be granted
granted to
to the
the support
support and
and
development
development of of SMEs,
SMEs, as
as aa pillar
pillar of
of the
the territorial
territorial development,
development, through
through the
the governmental,
governmental, European
European
or
or regional
regional policies
policies belonging
belonging to to the
the local
local and
and central
central administrative
administrative policymakers.
policymakers.
By analyzing the turnover of enterprises of different sizes, as conveyed in Table 4, even if all of
them experienced the same upward trajectory, Figure 3 reveals that the big enterprises have a greater
value for this indicator. Nevertheless, all of these cumulated data indicate that SMEs may greatly
exceed this value (Figure 2).
Sustainability 2020, 12, 347 10 of 22

By analyzing the turnover of enterprises of different sizes, as conveyed in Table 4, even if all of
them experienced the same upward trajectory, Figure 3 reveals that the big enterprises have a greater
value for this indicator. Nevertheless, all of these cumulated data indicate that SMEs may greatly
exceed this value (Figure 2).

Table 4. The turnover of active companies and the size categories (mil Lei).

Year SMEs (0–249) Big Companies (>250)

2009 608,806 242,028
2010 636,367 266,871
2011 699,188 307,963
2012 745,787 314,721
2013 740,529 314,464
2014 775,781 329,936
2015 827,549 349,618
2016 861,494 370,994
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].
Sustainability 2020, 12, x FOR PEER REVIEW 10 of 21

400000
350000
300000
250000
200000
150000
100000
50000
0
2009 2010 2011 2012 2013 2014 2015 2016

0-9 10-49 50-249 >250

Figure 3. Turnover of enterprises regarding the size category. Source: Authors’ processing from the
Figure 3. Turnover of enterprises regarding the size category. Source: Authors’ processing from the
Romanian Annual Statistical Yearbook 2010–2017 [76].
Romanian Annual Statistical Yearbook 2010–2017 [76].

By exploring the expenditures on innovation performed by SMEs and big enterprises in Romania,
By exploring the expenditures on innovation performed by SMEs and big enterprises in
as showed in Table 5 and Figure 4, it is noted that, at the national level, the innovation spending related
Romania, as showed in Table 5 and Figure 4, it is noted that, at the national level, the innovation
to SMEs follows the increased tendency of big enterprises, even the absolute value is smaller than the
spending related to SMEs follows the increased tendency of big enterprises, even the absolute value
one of the big companies. A closer analysis of years and regions of development, reported in Table 6
is smaller than the one of the big companies. A closer analysis of years and regions of development,
and Figure 5, shows that in Romania, the total innovation of SMEs from the Bucharest–Ilfov region is
reported in Table 6 and Figure 5, shows that in Romania, the total innovation of SMEs from the
larger than the innovation registered in the other regions. Thus, it is confirmed that an attractive region,
Bucharest–Ilfov region is larger than the innovation registered in the other regions. Thus, it is
such as the capital city of a country, offers suitable transport infrastructure, business opportunities,
confirmed that an attractive region, such as the capital city of a country, offers suitable transport
experience and better collaboration with the academic and research community, human resources
infrastructure, business opportunities, experience and better collaboration with the academic and
of various specializations and a competitive and challenging environment. The innovation of SMEs
research community, human resources of various specializations and a competitive and challenging
depends to a large extent on the specificity of the company [77], in close relation to the company’s
environment. The innovation of SMEs depends to a large extent on the specificity of the company
position on the market and its connection to the market’s request. It also hinges on its organizational
[77], in close relation to the company’s position on the market and its connection to the market’s
strategy and its management, on the protection offered for different measures of prevention and
request. It also hinges on its organizational strategy and its management, on the protection offered
protection against the risks that may occur especially in the field of investment.
for different measures of prevention and protection against the risks that may occur especially in the
field of investment.

Table 5. Expenditures on innovation of SMEs and big enterprises (mil Lei).

Year Big SMEs

2012 1,663,447 1,253,844
reported in Table 6 and Figure 5, shows that in Romania, the total innovation of SMEs from the
Bucharest–Ilfov region is larger than the innovation registered in the other regions. Thus, it is
confirmed that an attractive region, such as the capital city of a country, offers suitable transport
infrastructure, business opportunities, experience and better collaboration with the academic and
research community, human resources of various specializations and a competitive and challenging
environment. The innovation of SMEs depends to a large extent on the specificity of the company
Sustainability 2020, 12, 347 11 of 22
[77], in close relation to the company’s position on the market and its connection to the market’s
request. It also hinges on its organizational strategy and its management, on the protection offered
for different measures of prevention and protection against the risks that may occur especially in the
Table 5. Expenditures on innovation of SMEs and big enterprises (mil Lei).
field of investment.
Year Big SMEs
Table 5. Expenditures on innovation of SMEs and big enterprises (mil Lei).
2012 1,663,447 1,253,844
Year Big SMEs
2014 2,068,974 1,369,763
2012 1,663,447 1,253,844
2016 2014 3,732,421
2,068,974 2,623,607
1,369,763
Source: Authors’ processing2016
from the3,732,421
Romanian Statistical
2,623,607Yearbook 2010–2017 [76].
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].

4. The
Figure 2020,
Sustainability 12,value
x FORof expenditures
PEER REVIEW on the innovation of SMEs and big enterprises. Source: Authors’
11 of 21
processing from the Romanian Annual Statistical Yearbook 2010–2017 [76].
Figure 4. The value of expenditures on the innovation of SMEs and big enterprises. Source: Authors’
Table 6. Expenditures on innovation within active enterprises depending on regions (mil Lei).
processing from the Romanian Annual Statistical Yearbook 2010–2017 [76].
Region 2012 2014 2016
Table 6. Expenditures on innovation within active enterprises depending on regions (mil Lei).
1 North-West 251,952 111,085 82,354
Region
2 Center 2012
401,308 2014
353,020 2016
496,385
1 North-West
3 North-East
251,952
188,403
111,085
287,744
82,354
66,920
2 Center 401,308 353,020 496,385
4 South-East 686,340 490,651 284,162
3 North-East 188,403 287,744 66,920
5 South-Muntenia 277,680 628,358 283,633
4 South-East 686,340 490,651 284,162
65Bucharest–Ilfov
South-Muntenia 861,600
277,680 1,145,411
628,358 537,984
283,633
7 South-West Oltenia
6 Bucharest–Ilfov 123,233 15,789
861,600 1,145,411 4912
537,984
7 South-West
8 West Oltenia 126,775123,233 15,789
406,679 4912
57,815
8 West 126,775 406,679 57,815
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].
Source: Authors’ processing from the Romanian Statistical Yearbook 2010–2017 [76].

1500000

1000000

500000

0
2012 2014 2016

1 2 3 4 5 6 7 8

Figure 5. Total expenditures on innovation for the enterprises in the eight regions of development.
Figure 5. Total expenditures on innovation for the enterprises in the eight regions of development.
Source: Authors’ processing from the Romanian Annual Statistical Yearbook 2010–2017 [76].
Source: Authors’ processing from the Romanian Annual Statistical Yearbook 2010–2017 [76].

Prior studies show that most of these problems may be recognized and solved through an
extensive-learning organizational process. Its features are the capacity to successfully influence the
organizational performance of SMEs [78,79], the ability to lead on a competitive advantage [80] to a
strong performance of the business model [81] mirrored through the turnover, as well as to foster
Sustainability 2020, 12, 347 12 of 22

Prior studies show that most of these problems may be recognized and solved through an
extensive-learning organizational process. Its features are the capacity to successfully influence the
organizational performance of SMEs [78,79], the ability to lead on a competitive advantage [80]
to a strong performance of the business model [81] mirrored through the turnover, as well as
to foster social responsibility measures along with development and competitive growth [82].
The organizational capacity of learning may manifest itself via certain actual mechanisms, such as
experimentation, risk-taking, interaction with the external environment, the dialogue and the
participatory decision-making process [83]. It can also manifest itself through adopting modern
high-performance technologies [84] proving the importance of learning over the study of the market [85]
and of the clients’ choices on a very dynamic actual market [86]. These all contribute to the valuable
effect on the performance of SMEs regarding the ecological dynamism [87], of green products [88] and
of the investments regarding the training and specialization of the human resource [89].
SMEs’ development and their orientation in an extremely dynamic global market are reliant
on the educational and continuous training process of human resources for new specializations,
that may ensure the usage of new high-performance technologies in conditions of high performance
for enterprises [90]. The two conditions are essentially related as follows: the human resources
training limits the usage of new technologies in the field for active companies and even for their
management [91]. In response, all these will create certain conditions regarding the performed
investments and innovations of the management teams in general, and of the SMEs in particular.
The SMEs with a lower rate of bureaucracy, with a greater flexibility and a more rapid capability
to adapt to the market requests, may grow, may develop more efficiently through investments and
innovation expenditures, in all its forms.

4.2. Regression Models Outcomes

4.2.1. The Impact of Investments on Territorial Economic Growth

The empirical outcomes of the first regression model are reported in Table 7. The estimated value
of the coefficient of determination (R-squared) reveals that the variation of the values of the independent
variables (TX1A1 and TX3A) explains the variation of the dependent variable (TY1A) on a ratio of
90.59%. For each 1% increase in the value of gross investments (TX1A1), turnover (TY1A) increases by
0.25%. Therefore, the neoclassical theory [51] is supported. Also, if the number of employees (TX3A)
increases by one percent, turnover will increase by 1.11%, as in prior studies [6,28]. Hence, Hypothesis
1a is confirmed, the turnover at the national level being determined by the investments performed by
companies and by the number of employees.
With reference to the second hypothesis, the empirical estimations are shown in Table 8.
The estimated value of the R-squared reveals the fact that the variation of the values of the independent
variable (TX1A1) explains the variation of the dependent variable to an extent of 79.69%. If the value of
gross investments (TX1A1) rises by one percent, turnover will increase by 0.77%. Consistent with the
results from Table 7, the investments will determine an intensification of the profitability, consistent
with [49]. Thereby, Hypothesis 1b is confirmed, the turnover at the national level being determined by
the investments performed by companies.
Sustainability 2020, 12, 347 13 of 22

Table 7. Estimated parameters of the multiple linear regression model M1 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C −5.198040 1.723701 −3.015628 0.0037
log(TX1A1) 0.254622 0.135583 1.877976 0.0652
log(TX3A) 1.105328 0.225105 4.910274 0.0000
R-squared 0.905874 Mean dependent var 11.61481
Adjusted R-squared 0.902788 S.D. dependent var 0.532504
S.E. of regression 0.166028 Akaike info criterion −0.707575
Sum squared resid 1.681492 Schwarz criterion −0.606377
Log likelihood 25.64239 Hannan–Quinn criter. −0.667708
F-statistic 293.5348 Durbin–Watson stat 1.015572
Prob(F-statistic) 0.000000 Wald F-statistic 648.6972
Prob(Wald F-statistic) 0.000000
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 64. Included observations: 64.

Table 8. Estimated parameters of the simple linear regression model M2 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C 4.452171 0.683106 6.517543 0.0000
log(TX1A1) 0.768108 0.074703 10.28216 0.0000
R-squared 0.796887 Mean dependent var 11.61481
Adjusted R-squared 0.793611 S.D. dependent var 0.532504
S.E. of regression 0.241917 Akaike info criterion 0.030305
Sum squared resid 3.628470 Schwarz criterion 0.097770
Log likelihood 1.030236 Hannan–Quinn criter. 0.056883
F-statistic 243.2494 Durbin–Watson stat 1.441618
Prob(F-statistic) 0.000000 Wald F-statistic 105.7228
Prob(Wald F-statistic) 0.000000
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 64. Included observations: 64.

Further, the research aims to investigate to what extent the turnover of all the companies at the
national level is driven by the investments performed by companies, depending on their size (micro,
small, medium and big). As regards the third model, the quantitative results are displayed in Table 9.
Sustainability 2020, 12, 347 14 of 22

Table 9. Estimated parameters of the multiple linear regression model M3 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C 5.173465 0.240976 21.46883 0.0000
log(TX1B1) 0.211263 0.052112 4.054010 0.0001
log(TX1C1) 0.372942 0.084366 4.420517 0.0000
log(TX1D1) 0.143356 0.084269 1.701164 0.0942
log(TX1E1) 0.109920 0.051485 2.134995 0.0369
R-squared 0.929221 Mean dependent var 11.61481
Adjusted R-squared 0.924422 S.D. dependent var 0.532504
S.E. of regression 0.146393 Akaike info criterion −0.930141
Sum squared resid 1.264421 Schwarz criterion −0.761479
Log likelihood 34.76452 Hannan–Quinn criter. −0.863697
F-statistic 193.6448 Durbin–Watson stat 1.378223
Prob(F-statistic) 0.000000 Wald F-statistic 433.4057
Prob(Wald F-statistic) 0.000000
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 64. Included observations: 64.

The estimated value of the R-squared reveals the fact that the simultaneous variation of the values
of the independent variables (TX1B1, TX1C1, TX1D1 and TX1E1) explains the variation of the dependent
variable (TY1A) to an extent of 92.92%. If the value of investments performed by micro-enterprises
(TX1B1), small companies (TX1C1), middle-sized companies (TX1D1) or big companies (TX1E1)
increases by one percent, turnover will increase by 0.21%, 0.37%, 0.14% or 0.11%. Hence, Hypothesis
1c is confirmed, the turnover being determined by the investments performed by companies for all
types of sizes. The prominence of the SMEs over the development and support of the economic growth
of a certain country is proved. This reputation is acknowledged by EU legislation and regulations,
through the government policies that promote the establishing, increase and financing process of SMEs.
The consideration of political factors must be drawn so as to ensure easy access of these enterprises to
financing resources [17], alongside better and various development opportunities. Also, SMEs that
are flexible due to their size, organization and dynamics are easily adaptable to the market request.
They must wisely arrange their investments to a high implementation level of the technology and to
the automation process of all the activities, to ensure work and environment conditions according
to modern standards, besides the products and processes innovation. All these are attracted and
implemented by a modern management that uses techniques, procedures and up-to-date programming
and control instruments which would ensure the existence and the development of the long-term of
the SMEs, in the context of a continuously fluctuating market.
The estimations related to the fourth econometric model are conveyed in Table 10. The estimated
value of the R-squared reveals the fact that the variation of the values of the independent variables
(X1B2, X2B and X3B) explains the variation of the dependent variable (Y1B) to an extent of 75.92%.
Sustainability 2020, 12, 347 15 of 22

Table 10. Estimated parameters of the multiple linear regression model M4 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C −0.572733 0.199315 −2.873508 0.0042
X1B2 0.000609 0.000151 4.020901 0.0001
log(X2B) 0.350974 0.047841 7.336311 0.0000
log(X3B) 0.507031 0.050006 10.13947 0.0000
R-squared 0.759192 Mean dependent var 6.146454
Adjusted R-squared 0.758319 S.D. dependent var 1.689388
S.E. of regression 0.830521 Akaike info criterion 2.471268
Sum squared resid 571.1249 Schwarz criterion 2.493979
Log likelihood −1024.047 Hannan–Quinn criter. 2.479976
F-statistic 870.1407 Durbin–Watson stat 0.371520
Prob(F-statistic) 0.000000 Wald F-statistic 538.1923
Prob(Wald F-statistic) 0.000000
Source: Authors’ estimations. Notes: dependent variable: log(Y1B). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 832. Included observations: 832.

For each 1% increase in the number of micro-units (X2B) and the number of employees in a
micro-enterprise (X3B), turnover (TY1A) increases by 0.35% and 0.51%, respectively. A one-unit
increase in net investments performed by micro-enterprises (X1B2) will generate an increase in the
geometric mean of turnover by 0.06%. Nevertheless, for small firms, the sales revenues are regularly
more appropriate in overcoming liquidity problems than for funding the investment [42]. As such,
Hypothesis 1d is confirmed, the turnover of micro-enterprises at the national level being determined by
the investments performed by companies, by the number of micro active units and by the number of
the employees. Nevertheless, with reference to this category of enterprises, the investments are even
more difficult to be implemented because the company should access external financing resources.

4.2.2. The Impact of Innovation on Territorial Economic Growth

The outcomes of the fifth regression model are exhibited in Table 11. The estimated value of the
R-squared reveals the fact that the simultaneous variation of the values of the independent variables
(TX4E and TX4D) explains, to an extent of 59.21%, the variation of the dependent variable (TY1A).
For each 1% increase in the value of expenditures on innovation performed by big companies (TX4E),
turnover (TY1A) increases by 0.37%. Besides, in the case of SMEs, the relationship between expenditures
on innovation and turnover is not statistically significant. Unfortunately, in line with Armeanu, Istudor
and Lache [38], Romanian SMEs reveal a reduced ability to innovate, alongside their concentration in
low-value-added generating areas, restricted access to financing and poor management. Therefore,
Hypothesis 2a is confirmed only for SMEs.
Sustainability 2020, 12, 347 16 of 22

Table 11. Estimated parameters of the multiple linear regression model M5 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C 8.513681 0.645311 13.19313 0.0000
log(TX4D) −0.078573 0.075360 −1.042647 0.3090
log(TX4E) 0.369872 0.092168 4.013022 0.0006
R-squared 0.592076 Mean dependent var 11.70371
Adjusted R-squared 0.553226 S.D. dependent var 0.520231
S.E. of regression 0.347729 Akaike info criterion 0.841681
Sum squared resid 2.539221 Schwarz criterion 0.988937
Log likelihood −7.100167 Hannan–Quinn criter. 0.880748
F-statistic 15.24007 Durbin–Watson stat 1.142976
Prob(F-statistic) 0.000081 Wald F-statistic 13.00972
Prob(Wald F-statistic) 0.000211
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 24. Included observations: 24.

The results regarding the examination of the sixth hypothesis are presented in Table 12.
The estimated value of the R-squared reveals the fact that the variation of the independent variable
(TX4A) explains, to an extent of 39.01%, the variation of the dependent variable (TY1A). Also, if the
value of expenditures on innovation performed by all enterprises increases by one percent, turnover
will increase by 0.26%. Consistent with Exposito and Sanchis-Llopis [39], the introduction of product
innovation emphasizes a positive impact on the probability of sales intensification. Hence, Hypothesis
2b is confirmed.

Table 12. Estimated parameters of the simple linear regression model M6 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C 8.564310 0.896656 9.551389 0.0000
log(TX4A) 0.256394 0.075632 3.390020 0.0026
R-squared 0.390104 Mean dependent var 11.70371
Adjusted R-squared 0.362382 S.D. dependent var 0.520231
S.E. of regression 0.415410 Akaike info criterion 1.160553
Sum squared resid 3.796439 Schwarz criterion 1.258725
Log likelihood −11.92664 Hannan–Quinn criter. 1.186598
F-statistic 14.07174 Durbin–Watson stat 1.684148
Prob(F-statistic) 0.001104 Wald F-statistic 11.49224
Prob(Wald F-statistic) 0.002633
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 24. Included observations: 24.

The outcomes of the seventh model are reported in Table 13. The estimated value of the R-squared
reveals the fact that the variation of the independent variable (TX4E) explains, to an extent of 57.44%,
the variation of the dependent variable (TY1A). Hence, for each 1% increase in the expenditures
on innovation performed by big enterprises (TX4E), turnover (TY1A) increases by 0.31%. Hereby,
Hypothesis 2c is confirmed. Companies invest in innovation aiming to gather market share, decrease
Sustainability 2020, 12, 347 17 of 22

costs and turn out to be more prolific. Since customer requests have become more specific and
competition has amplified, innovation is essential [60].

Table 13. Estimated parameters of the simple linear regression model M7 by using the method of
least squares.

Variable Coefficient Std. Error t-Statistic Prob.

C 8.292346 0.739660 11.21103 0.0000
log(TX4E) 0.306904 0.068674 4.468970 0.0002
R-squared 0.574391 Mean dependent var 11.70371
Adjusted R-squared 0.555045 S.D. dependent var 0.520231
S.E. of regression 0.347020 Akaike info criterion 0.800788
Sum squared resid 2.649306 Schwarz criterion 0.898959
Log likelihood −7.609451 Hannan–Quinn criter. 0.826832
F-statistic 29.69058 Durbin–Watson stat 1.083840
Prob(F-statistic) 0.000018 Wald F-statistic 19.97170
Prob(Wald F-statistic) 0.000192
Source: Authors’ estimations. Notes: dependent variable: log(TY1A). Method: least squares. MacKinnon–White
(HC2) heteroskedasticity-consistent standard errors and covariance. Sample: 1 24. Included observations: 24.

5. Concluding Remarks and Policy Implications

The current study explored the impact of investments and innovation on territorial economic
growth, as measured by the turnover, for Romanian business statistics series over the period 2009–2017.
By estimating several log–log linear regressions, the empirical findings provide support for a positive
impact of investments on territorial economic growth. The relationship was proven both for all active
enterprises at the national level and for micro, small, middle and big companies. In the case of
innovation-oriented expenditures, our estimation results show a positive impact on turnover for all
enterprises and big companies, but a lack of association was established in the case of SMEs. Besides,
there was a noticeable positive impact of firm size on turnover for all active enterprises at the national
level, as well as for active micro-units. Also, the results suggested a positive influence on the number
of active micro-units on territorial economic growth.
In our view, this study has some noteworthy policy implications. The managers should learn
from the previous experience of other companies whose success or failure had been investigated so
as to recognize the factors and relations that led to factual results [92]. These companies will have to
adopt several requirements such as: A willingness to give up the traditional type of management,
possible, by identifying and accepting new challenges, building an organizational structure regarding
the learning process and the adoption process of new technologies along with the innovation involved
within all domains. All these essentially lead to management innovation, a segment that is directly
related to the organizational facet of the company [93], to the usage of new managerial practices,
the practice of so-called management innovators [94]. They should try to combine the ideas gained
from various studies, analyze and further adapt them to the specific needs of the intended enterprises.
All these together form the organizational innovation and carry an important role regarding the results
of innovation [95] aiming at the process and the final products.
In Romania a series of programs of European financial support is available to be accessed,
by SMEs, through certain projects regarding development, the implementation of high technologies
or the mechanization of some processes, for the instruction of employees, for the protection of the
environment, for the quality assurance in all domains, to provide support for the management
efficiency [96]. There are also other types of projects that help the SMEs by offering financing, funding
business incubators, stimulating some activities or encourage higher employment, motivating the
Sustainability 2020, 12, 347 18 of 22

purchase and the implementation concerning information and communication technologies that form
the core of development. It is vital to have a bigger financial system that is able to support entrepreneurs
and the different stages of the lifecycle of small firms [46]. Higher levels of economic, financial and
institutional expansion are imperative in improving firm financial restrictions [48].
This study has several restrictions. Perhaps the most constraining limitation of this research is
emphasized by the selected dataset, collected from the Romanian Statistical Yearbook. Owning more
disaggregated data, namely firm-level data, would allow catching more characteristics such as total
assets, firm age, labor productivity or internationalization. Given that the heterogeneous aspect of
SMEs hinges on the size of a region’s economic activity, regional effects intended for controlling for
the eight regions of Romania were not considered. As well, consistent with Motta and Sharma [28],
employing the number of employees as a measure towards firm size may be challenging inasmuch as
the number of employees is driven by the economic size of the company, quality of the firm, selection
of operational leverage and type of business. As future research avenues, the current paper should
be developed by exploring the causal relationships between, investments, innovation and territorial
economic growth. As well, a sectorial analysis may depict another forthcoming direction.

Author Contributions: Conceptualization, S, .C.G., M.A.B., A.H. and L.N.S.; data curation, S, .C.G., M.A.B., A.H.
and L.N.S.; formal analysis, S, .C.G., M.A.B., A.H. and L.N.S.; funding acquisition, S, .C.G., M.A.B., A.H. and
L.N.S.; investigation, S, .C.G., M.A.B., A.H. and L.N.S.; methodology, S, .C.G., M.A.B., A.H. and L.N.S.; project
administration, S, .C.G., M.A.B., A.H. and L.N.S.; resources, S, .C.G., M.A.B., A.H. and L.N.S.; software, S, .C.G.,
M.A.B., A.H. and L.N.S.; supervision, S, .C.G., M.A.B., A.H. and L.N.S.; validation, S, .C.G., M.A.B., A.H. and
L.N.S.; visualization, S, .C.G., M.A.B., A.H. and L.N.S.; writing—original draft, S, .C.G., M.A.B., A.H. and L.N.S.;
Writing—review and editing, S, .C.G., M.A.B., A.H. and L.N.S. All authors have read and agreed to the published
version of the manuscript.
Funding: This research received no external funding.
Conflicts of Interest: The authors declare no conflict of interest.

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