Patterns of innovation and skills in small firms

Drawing upon a sample of 1345 'Northern British' SMEs, the current paper seeks to investigate patterns of association between firm-level innovativeness and a variety of indicators of skills, skill requirements and training activity. In so doing, the paper is able to distinguish between types and level of innovation (i.e. product or process, novel or incremental) and between manufacturing and service firms. In broad terms, the key findings serve to underline the importance of intermediate 'technical' skills, rather than higher level 'technology' skills. However, perhaps the most fundamental observation is the recognition that labour quality has a dynamic component, in addition to the static elements commonly measured. The most consistent and reliable statistical associations recorded concern the relationship between innovativeness (in both products and processes and in manufacturing and services) and firm-level training intensity. Simply put, the most innovative firms train more staff. Clearly, as Warner [Warner, M., 1996. Innovation and training. In: Dodgson, M., Rothwell, R. (Eds.), The Handbook of Industrial Innovation, Edward Elgar, Cheltenham, p. 348] would have it, 'innovation and training in modem economies are inextricably linked'. (C) 2004 Elsevier Ltd. All rights reserved.