Interaction between Innovation in Small Firms and Their Environments : An Exploratory Study

In rural areas, small food firms are potentialsources of employment and growth. This study examines their innovationbehaviors. A sample of 323 small food and drink (called food) firms in 11regions in six European countries was surveyed, and data collected for1994-1997. Seventeen variables were devised, reflecting entrepreneurial strategies,coordination systems and institutions, technological learning, and regionalglobal conditions. The performance of different regions and firms in differenttypes of regions was compared. Certain factors were found to be associated withinnovation. Four clusters of small food firms were identified according to innovativebehaviors: multiple innovators, non-innovators, focused innovators (lowerperformance), and focused innovators (higher performance). Although some firmsare non-innovators, the largest cluster of food firms is involved in multipleforms of innovative activity. The capacity to innovate is a complex featurewith determinants that change within different contexts. The study is a first step in incorporating quantitative measures ofinnovative capacity at the firm level and the local development environment, inorder to evaluate interaction between firm performance and regionaldevelopment. Conclusions indicatethat environmental conditions might leadto different innovative patterns, suggesting specific instruments for regionalpolicy. (TNM)