Process innovation in small businesses: The self-employed as entrepreneurs

Innovation is one of the key attributes that sets the entrepreneurs apart from the rest of self-employed people. This paper attempts to distinguish between these two categories by means of exploring the determinants of process innovation in small businesses using a survey of self-employed workers in Andalusia, Spain. The theoretical framework adopted distinguishes between three types of factors affecting the innovative activities: (1) personal characteristics of the self-employed, (2) business characteristics and (3) the characteristics of the external environment. A Heckman-type model of the extent of process innovation that accounts for sample selection bias is estimated.