Typologies of Innovation in Small and Medium Sized Enterprises in Norway

This paper asks whether we can find regularities, or typologies, of innovation within the extremely complex mix of small firms which is found in all market economies. The population of firms in advanced economies usually consists of a relatively small number of large enterprises - which are responsible for a relatively large share of output, employment and R&D - and very large numbers of SMEs. Policy-makers are interested in SMEs for two main reasons. First, the SME sector is, in many OECD economies, a net job creator. Second, it is often argued that SMEs are actual or potential sources of radical innovation and growth. At the same time, SMEs may face problems and obstacles which justify policy support. However major problems for analysis and policy arise from the fact that SMEs, in all economies, exhibit a great deal of diversity and heterogeneity. For policy-makers, diversity gives rise to fundamental difficulties about the appropriate target groups for policy. One important but often neglected fact is that highly-innovative SMEs are not necessarily found only in so-called high-technology sectors of the economy. Although SMEs in high-tech industries are usually innovative and technologically advanced, it is also possible for a firm to possess these qualities in a so-called 'low-tech' or mature industry. There is usually considerable variety among the firms within any industry, and many economic activities can give rise to high-performing and innovative firms. This suggests the possibility of identifying innovative small firms by looking at the innovation-relevant characteristics of such firms, rather than focusing only on the industries or activities in which they operate.