Sectoral patterns of small firm innovation, networking and proximity

Drawing upon a sample of 597 small and medium-sized manufacturing firms, this article investigates the extent to which cooperation for innovation is associated with firm-level product and process 'innovativeness' and, where collaborative relationships are reported, the factors which influence their spatial distribution. With respect to the former issue, the data suggests considerable variety of association across Pavitt's [Research Policy 13 (1994) 343] sectoral taxonomy and innovation type. However, the data also indicates the need for caution when developing network strategies or policies: the evidence presented here is unequivocal in noting that innovation is neither a necessary nor less a sufficient condition for innovation. Moreover, internal resources often act as complements to, or indeed appears to negate the need for, external resources. With regards to the spatial distribution of firm linkages, it appears that increasing firms size and export propensity are positively associated with external linkages at a higher spatial level. Moreover, the spatial reach of innovation-related linkages is also likely to be greater for firms reporting the introduction of relatively novel innovations (i.e. products or processes which are new to the industry). In contrast, smaller firms and firms engaged in incremental product innovations appear more likely to be locally embedded. (C) 2002 Elsevier Science B.V. All rights reserved.