The innovation gap: What separates small and large companies?
New findings from DNV reveal how structure, leadership, and investment levels impact innovation success – and why larger companies leveraging innovation management often have the upper hand.
Innovation is widely acknowledged as critical to business resilience and long-term competitiveness. But how does the approach to innovation differ between small and large companies? Findings from DNV’s recent ViewPoint survey reveal distinct differences in structure, investment, leadership, and maturity.
When asked to assess their own innovation maturity, only 9% of small companies (less than 100 employees) rated themselves as “leading,” compared to 18% of large companies (more than 500 employees). This self-perception is supported by the presence (or absence) of key innovation practices. Larger companies more often have centralized structures, defined strategies, and leadership commitment – all characteristics aligned with higher innovation maturity.
Different priorities, different focus
Both small and large companies cite similar top reasons for innovating: enhancing competitiveness, supporting strategic objectives, and increasing value from new products and services. However, large companies are significantly more likely to link innovation to strategic objectives (69% vs 50%) and to use innovation to increase resilience and adapt to uncertainty (42% vs 31%).
This indicates that large companies are not only innovating to stay ahead of the competition but also to future-proof their operations. Small companies, on the other hand, appear more focused on immediate, external business drivers rather than internal, strategic alignment.
A key differentiator
Only 13% of small companies report using a structured innovation management approach, compared to 24% of large companies. Structured approaches, such as those based on the innovation management system standard ISO 56001, are linked to greater innovation maturity and more successful project outcomes. While structure may seem burdensome to smaller organizations, the data suggests it is a critical enabler for consistent innovation delivery.
The difference also appears in how companies manage innovation initiatives. Nearly one in four small companies report having no formal approach at all, versus just 7% of large companies. Conversely, a centralized innovation model is reported by 45% of large companies, but only 32% of small ones.
Innovation is still a stretch for smaller firms
Budget is another area where large companies pull ahead. 39% report increasing their innovation budgets in recent years, compared to just 29% of small companies. In fact, 15% of small companies say they have no innovation budget at all – four times more than large companies.
While lack of resources is a common challenge for companies of all sizes, being too busy with other projects is the single biggest reason why innovation efforts fail. For small companies, the most frequently cited barriers to innovation success are competition from other projects (40%) and lack of a clear strategy (22%), alongside resource constraints (21%). Among large companies, competition from other projects (34%) and insufficient funding and resources (23%) top the list. Lack of a clear strategy is only an issue for 17%.
Structure breeds results
Only 27% of small companies say that all or a majority of their innovation projects have been successful in the past three years, compared to 37% of large companies. At the other end of the scale, 31% of small companies report either no success or very limited success, compared to just 16% of large companies.
This contrast reflects the benefits of structure, strategy, and dedicated resources. While innovation inherently involves risk, the data indicates that large companies – with their more mature practices – are better positioned to turn ideas into impact.
What small companies can learn from larger peers
Despite differences, small companies are clearly engaged in innovation. Many are actively running multiple projects. However, they face hurdles in strategy, funding and structure. The survey reveals that companies of all sizes can benefit from:
- Establishing a clear innovation strategy aligned with business goals
- Defining roles and responsibilities for innovation leadership
- Allocating dedicated resources and budgets to support innovation
- Implementing structured innovation management processes based on standards such as ISO 56001.
Smaller companies may not have the same scale or capacity as larger firms, but adopting even basic elements of a structured innovation management framework can significantly increase their ability to innovate successfully and sustainably.
Closing the gap
As innovation becomes a key lever for competitiveness and resilience, the need for structure, strategy, and leadership becomes clearer – regardless of company size. While large companies tend to lead in innovation maturity today, the path is open for small companies to catch up. With the right structure in place, even limited resources can deliver big results.
