X-Efficiency of Innovation Processes: Concept and Evaluation based on Data Envelopment Analysis

This paper investigates X-(in)efficiency of innovation processes in Small and Medium-sized Enterprises (SMEs). We have adopted the following approach: (a) we provide both a concept of X-(in)efficiency and a model of innovation processes for each SME; (b) from this model we evaluate both the dimensions of the innovation processes and the X-(in)efficiency of these processes using a variant of the Data Envelopment Analysis (DEA) model; (c) finally, we characterize X-inefficiency by using techniques of exploratory analysis derived from an empirical analysis. Our approach has been applied to regional SMEs in Normandy (France) with a representative random sample of 80 innovative businesses. The results show the existence of X- inefficiency in the innovation processes of SMEs in 71% of cases. This X-inefficiency arises primarily from the difficulties that entrepreneurs face in implementing the interacting rules and standards of exploitation and exploration activities.