ABSTRACT
Introduction Small and Medium Enterprises (SMEs) are a heterogeneous group of firms. The majority is to be found in traditional, less knowledge intensive sectors such as furniture and textile as well as in more skilled based engineering industries producing machinery and tools. These firms are in best cases exploiters of knowledge coming from external R&D institutes and universities, but most commonly their production is either based on knowledge from the client firms (in the case of capacity subcontractors) or on their skilled workforce (if they are specialized suppliers or if they produce for the final market). However, one also finds SMEs which are both knowledge explorers and exploiters. These firms are new emerging firms in knowledge intensive sectors such as biotech and nanotech which base their production on newly created knowledge from universities in the case of university spin-offs, or in collaboration with universities in case of knowledge based entrepreneurship. Finally, one finds SMEs in businesses such as fashion, design and media, where knowledge for innovation is explored and exploited in quite different ways compared to the other types of SMEs. Thus, the activities of these different types of SMEs reflect their dependence on different knowledge bases, which is important to recognize to understand the way they carry out knowledge creation and innovation. In this chapter we distinguish between analytical, synthetic and symbolic knowledge bases (Asheim and Gertler 2005, Asheim and Coenen 2005, Asheim et al. 2007). Such a heterogeneous group of firms represents different challenges with respect to what kind of innovation support is adequate and efficient for promoting innovativeness and competitiveness which, consequently, require a fine-tuned innovation policy directed to the needs of the respective types of SMEs.
