Small and Medium Enterprises(SMEs)are bringing fundamental economic changes inmany countries.Likewise in Saudi Arabia it can be taken as one of the focused sectors to developthe economy of the country.One of the key trends in developing SMEs in differenttechnologically advanced and less advanced countries is the consistent growth of innovation inthe sector.In Saudi Arabia the feasibility of innovation achievement in SMEs sector is seen onthe basis of the required economic contribution to the country in this research. We can observe four components in Saudi Arabia's national innovation system,i.e.enterprises,research and education institutes,state institution and programmes and services.Underenterprises,we can observe Hi-Tech entezprises and Traditional industries.Also underUniversities,Vocational schools and research Institutes are seen.Under State Institutions andPrograms we can see ministry of research,education and economy; R & D support institutionsand programs; and legislation.Likewise under 'services' we can notice three things:technologytransfer institutions,financial institutions and special services. Financial resources,current participations,customer profile,distinctive know-how,technological skills,corporate governance,organizational structure,managerial styles,corporateculture,and technological constraints are also key aspects relating to innovation in SMEs sectorin Sandi Arabia. The lacking of innovation in Saudi Arabia SMEs IT industry forms the basis of this research,and aims to achieve the following objectives: To provide research based information to the government of Saudi Arabia and to thepublic in order to help them to evaluate the real opportunities and trait of SMEs ITIndustry. To identify the relationship between innovation and information technology success inSaudi Arabia SMEs. To select the factors of innovation in information technology SMEs to make sure they canbe successful at present and in the future. To come out with key,could explain the relationship between determinants of innovationand business success. The research structure was clarify in eight chapters; chapter one was the introduction,chaptertwo is basic theories of the research,chapter three is competitiveness in SMEs based oninnovation,chapter four innovation competitiveness in SMEs,chapter five strategies ofimprovement in SMEs,chapter six was SMEs innovation in Saudi Arabia,chapter seven is dataanalysis and discussion,while the last chapter was conclusion and future research. With regard to the first questionnaires and survey,the research basically focuses on sevenvariables which were found through the first survey:Effective Research Development Strategy(ERDS),Organizational competitiveness(OC),Core Competences(CC),OrganizationalKnowledge Management(OKM),Organizational Learning(OL),Organizational Vision(OV),and Organizational Environment(OE).Finding Key Success Factors(KSF)of SME's Innovationin Saudi Arabia is the key agenda in this research. This research focuses on the Key Success Factors of Innovation(KSF)in SME's byconsidering the case of IT industry in Saudi Arabia.After having deep literature reviews andcollecting direct information using questionnaire from 214 respondents who were from differentsex,age and occupational background in Saudi Arabia.Among them 114 and 110 are male andfemale respectively.That is 52.2％ of the respondents were men and 48.8％ of the respondentswere female.The questionnaires were distributed to managers,workers and investors in SME'ssector. After conducting multiple regression analysis the research findings show that when we aretalking about the firms we are talking about two perspectives,one is independent firms,and thesecond is the subsidiary firms as the following terminology represents: In independent firms,the result from running regression of their data shows thatOrganizational Competitiveness(OC),Effective Research Development Strategy(ERDS),Core Competences(CC),Organizational Learning(OL),Organizational KnowledgeManagement(OKM),Organizational Vision(OV)and Organizational Environment(OE)are the most important elements of Key Success Factors(KSF)of SME's Innovation inSaudi Arabia independent firms.But on the other hand,we can see two variable regardingfinal result:organizational competitiveness and Organizational Knowledge Managementhave strong significant with dependent-variable. On the contrary in subsidiary firms,the result from running regression of their data showsthat Organizational competitiveness(OC),and Organizational Learning(OL),EffectiveResearch Development Strategy(ERDS),Core Competences(CC),Organizational Vision(OV)and Organizational Environment(OE)are not the most important element of KeySuccess Factors(KSF)of SME's Innovation in Saudi Arabia subsidiary firms.But itshows Organizational Knowledge Management(OKM)is the most important elements ofKey Success Factors(KSF)of SME's Innovation in Saudi Arabia subsidiary firms.Alsowe can see one variable,Organizational Knowledge Management(OKM),havesignificant relationship with dependent-variable.KEY WORDS:Key Success Factors,Innovation,SMEs,Information Technology Industry inSaudi Arabia
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