Managing Technology and Innovation in the IT & ITeS MSME Sector: An Empirical Study of Firms in Bangalore.

Abstract

This study examines how technology and innovation management practices influence innovation performance among Micro, Small and Medium Enterprises (MSMEs) in the Information Technology (IT) and IT-enabled Services (ITeS) sector, using evidence from Bangalore, India’s leading technology cluster. Drawing on the resource-based view and dynamic capabilities perspective, the paper develops and empirically tests a capability-based framework that integrates managerial capability, absorptive capacity, technological infrastructure, and external collaboration. Primary data were collected through a structured survey of 120 IT & ITeS MSMEs and analyzed using hierarchical regression and moderation techniques. The findings indicate that managerial capability and absorptive capacity exert strong and statistically significant effects on innovation performance, while technological infrastructure and external collaboration play complementary enabling roles. Financial and talent-related constraints are found to weaken the absorptive capacity–innovation performance relationship. The study contributes to innovation management theory by demonstrating the contingent nature of absorptive capacity in service-oriented MSMEs and offers practical implications for managers and policymakers seeking to strengthen innovation capacity in emerging-economy technology clusters.