Explaining Innovativeness in Small High-technology Firms

The paper is an exploration of sources of innovativeness of high-technology small and medium-sized manufacturing enterprises (SME) in South East England. A range of indicators of innovative performance and potentially important explanatory factors are constructed, and the links between them analysed statistically. Some indicators are experimental and more fine-grained than conventional measures. Explanatory factors internal and external to the firms are considered, and innovativeness-enhancing effects associated with geographical proximity of external factors are investigated. The results point to the importance of science institutions, as well as other agents whose capabilities are complementary to what the SMEs themselves possess. However, there is no support for the current policy fashion of promoting clusters of SME in similar lines of business