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This paper is about the impact of clusters on entrepreneurship at the regional level. Defining entrepreneurship as the creation of new organisations and clusters as a geographically proximate group of interconnected firms and associated institutions in related industries, this paper aims to answer three research questions : first, do clusters matter to entrepreneurship at the regional level? Second, if clusters are associated with different levels of entrepreneurship, what explains those differences? Third, what do the answers to the previous questions imply for academics and policy makers? To answer these questions, this paper distinguishes between clusters and industrial agglomerations and advances a theoretical model and empirical research to explain the impact of clusters on entrepreneurship at the regional level. This paper uses the 97 German planning regions as units of analysis to test the hypotheses. Using hypotheses testing and OLS fixed-effects model, this paper finds that clusters do have an impact on entrepreneurship at the regional level, but industrial agglomerations do not. Implications for academics and policy makers and suggestions for future research are given in the concluding section. [ABSTRACT FROM AUTHOR]

Introduces articles on the role of institutions on entrepreneurship and firm growth, published in the November 2002 issue of the 'Small Business Economics' journal.

Although the field was initially slow on the uptake, contextualization of entrepreneurship research has come a long way in recent years. Arguably, entrepreneurship demands contextualization more than many other fields, because not only is entrepreneurship broad and diverse in its scope but it is also frequently about the creation of differences. In this paper, we outline three recent and overlapping waves of contextualization in the entrepreneurship field. The discussion has moved from challenging the "standard" or Silicon Valley model of entrepreneurship by considering the why, what, and how of entrepreneurship (first wave) towards considering more subjective elements and the construction and enactment of contexts (second wave), through challenging us to deepen our theorizing by broadening the domain of entrepreneurship research (third wave). The articles in this special issue on "Entrepreneurship in Context" represent this third wave. Taken together, they illustrate entrepreneurial diversity and comprehend entrepreneurship and innovation as everyday activities. We end with a brief consideration of where the rising tide of contextualization may take the field during the next few years. [ABSTRACT FROM AUTHOR]

Introduces a series of articles which focused on the internationalization of small and medium enterprises. Conference attended by scholars from international business enterprises in September 2000; Convergence of International Business and Entrepreneurship; Perspectives from entrepreneurship.

Based upon two strands of literature, this paper hypothesizes a U-shaped relationship between a country’s rate of entrepreneurial dynamics and its level of economic development. This would imply a different scope for entrepreneurship policy across subsequent stages of development. Regressing global entrepreneurship (GEM) 2002 data for nascent entrepreneurship in 36 countries on the level of economic development as measured either by per capita income or by an index for innovative capacity, we find support for a U-shaped relationship. The results suggest that a ‘natural rate’ of nascent entrepreneurship is to some extent governed by ‘laws’ related to the level of economic development. For the most advanced nations, improving incentive structures for business start-ups and promoting the commercial exploitation of scientific findings offer the most promising approach for public policy. Developing nations, however, may be better off pursuing the exploitation of scale economies, fostering foreign direct investment and promoting management education. [ABSTRACT FROM AUTHOR]

Entrepreneurial activity is generally assumed to be an important aspect of the organization of industries most conducive to innovative activity and unrestrained competition. This paper investigates whethertotal entrepreneurial activity(TEA) influences GDP growth for a sample of 36 countries. We test whether this influence depends on the level of economic development measured as GDP per capita. Adjustment is made for a range of alternative explanations for achieving economic growth by incorporating theGrowth Competitiveness Index(GCI). We find that entrepreneurial activity by nascent entrepreneurs and owner/managers of young businesses affects economic growth, but that this effect depends upon the level of per capita income. This suggests that entrepreneurship plays a different role in countries in different stages of economic development. [ABSTRACT FROM AUTHOR]

Studies on the impact of technological innovation on growth have been largely mute on the role of?new firm formation. Using cross-sectional data on the 37 countries participating in GEM 2002, this paper uses an augmented Cobb-Douglas production to explore firm formation and technological innovation as separate determinants of growth. One area of interest is the contrast between different types of entrepreneurial activities as measured using GEM Total Entrepreneurial Activity (TEA) rates - high growth potential TEA, necessity TEA, opportunity TEA and overall TEA. Of the four types of entrepreneurship, only high growth potential entrepreneurship is found to have a significant impact on economic growth. This finding is consistent with extant findings in the literature that it is fast growing new firms, not new firms in general, that accounted for most of the new job creation by small and medium enterprises in advanced countries. [ABSTRACT FROM AUTHOR]

This paper introduces the special issue of Small Business Economics on Innovation. What binds the papers together is either their focus on the effect of firm size on the causes and consequences of innovation or their focus on the role small firms play in reshaping the industrial landscape. [ABSTRACT FROM AUTHOR]

This paper investigates how job creation and destruction behavior varies by employer size in the U.S. manufacturing sector during the period 1972 to 1988. The paper also evaluates the empirical basis for conventional claims about the job-creating prowess of small businesses. The chief findings and conclusions fall into five categories: (1) Conventional wisdom about the job-creating prowess of small businesses rests on misleading interpretations of the data. (2) Many previous studies of the job creation process rely upon data that are not suitable for drawing inferences about the relationship between employer size and job creation. (3) Large plants and firms account for most newly-created and newly-destroyed manufacturing jobs. (4) Survival rates for new and existing manufacturing jobs increase sharply with employer size. (5) Smaller manufacturing firms and plants exhibit sharply higher gross rates of job creation but not higher net rates. [ABSTRACT FROM AUTHOR]

A number of recent studies have suggested that access to collateral in the form of housing assets may be an important factor in the process of new firm formation. In particular, it has been suggested that variations in housing wealth may be able to account for a substantial proportion of the variation in rates of business creation within and between the U.K. regions. Re-examining this issue, the paper finds that once appropriate allowance is made for the presence of dynamics in the formation process, the evidence for a positive relationship between housing wealth and regional rates of new business creation disappears. However, there is evidence in favour of the proposition that access to external collateral in this form may help established firms to stay in business. [ABSTRACT FROM AUTHOR]

This paper examines how the firm-size distribution has shifted over the last two decades across a broad spectrum of European countries. The evidence suggests that a shift away from large firms and towards small business has taken place, particularly is the southern regions and in the high technology indutries. [ABSTRACT FROM AUTHOR]

This paper investigates which business starters experience credit rationing by simultaneously analyzing which business founders apply for credit and which are refused. We argue that credit denial depends largely on the entrepreneurs’ commitment and signals regarding the repayment of the loan and the success chances of the proposed business. Our empirical analysis is based on a sample of 1140 potential business starters in the Dutch county South Limburg. Our findings show that commitments drive the credit application and approval, while the effects of signals are mixed. The findings also suggest that business founders have a pretty good idea regarding whether their applications will be honored or not. [ABSTRACT FROM AUTHOR]

This paper argues that individuals differ in terms of their perception of opportunities because of the differences between the networks they are embedded in. We focus on two aspects of individuals’ embeddedness in networks, that is, (1) individuals’ belonging to residential areas that are more or less likely to be characterized by network cohesion, and (2) individuals’ differential access to network contacts based on the level of human capital they hold. Our analyses show that the nature of one’s residential area influences the perception of entrepreneurial opportunities. Further, we find a positive effect for education, i.e., people with a higher educational level are more likely to perceive entrepreneurial opportunities compared to those with a lower educational level. [ABSTRACT FROM AUTHOR]

Presents an analytical study of the evolution of the distribution of firm size within an industry in the U.S. Description of density of the cross-sectional distribution of firm size; Evaluation of the empirical application to the evolution of size distribution of population of firms in the U.S. biotechnology industry; Concluding remarks and model limitations of the study.

Analyzes establishment error in estimating employment targets in business startups and expansions. Examination of the connection between employment projection error and establishment age; Evaluation on the passive firm learning model of employment projection error; Data analysis on employment projection error; Discussion on error of overachievers and underachievers.

Presents a study which built an analytical framework to highlight the role of two key factors in a firm's decision to remain small. Background on the two factors, namely regulation and economies of scale; Information on the model built and its main policy implications; Empirical tests and findings; Conclusion.

The data concerning interest rates paid by small and medium sized firms on credit and financial markets as well as the available balance-sheets confirm the idea that firms have difficulties to get financial resources. This paper tries to put in light the financial disparities among firms when a discrimination resting on size characterises the functioning of credit market. The first section presents the main financial characteristics of French SMEs: the low level of equities, the heaviness of short term debts and the over use of payment delays. Section 2 shows how French and European authorities reacted in order to improve the financial situation of SME's and to reduce their liquidity constraint, changing tax policy and promoting the creation of new means of financing. [ABSTRACT FROM AUTHOR]

The recent emergence in the industrial organization literature of a wave of studies identifying small firms as more innovative than their larger counterparts poses something of a paradox? Where do small firms get their knowledge generating inputs? The purpose of this paper is to link innovative inputs to innovative outputs. This enables the identification of the extent to which spillovers exist from major sources generating new economic knowledge, such as the research and development (R&D) laboratories of private and public firms, as well as universities, to the innovative activity of large and small enterprises. Based on twenty Italian regions over a period of nine years, the empirical evidence suggests that, while firm R&D expenditures contribute to the generation of innovative output for all firms, as well as for large and small firms, the spillovers from university research are apparently more important for small-firm innovation than for large-firm innovation. [ABSTRACT FROM AUTHOR]

This paper examines the evolving relationship in science between the reward structure and entrepreneurial activity. We draw a distinction between two types of property rights. Basic science is fostered by a mechanism of reputational rights; technological advances - and the products and processes they produce - are fostered by a mechanism of proprietary rights. The two forms of property rights differ markedly in terms of the incentives they provide to share information in a timely fashion. We argue that because of a host of factors university-based scientists in certain fields are more likely to "privatize" knowledge today than in the past, trading reputational rights for proprietary rights. Events in the life sciences serve as a case study. A discussion of how privatization affects basic science follows. Although the evidence is far from complete, we conclude that the movement towards privatization may be more beneficial to product development and the scientists engaged in the activity than to basic science. [ABSTRACT FROM AUTHOR]

This paper provides the first empirical examination of the relationship between the application of flexible technologies and the firm-size distribution. In particular, we test the hypothesis that implementation of flexible technologies has tended to promote small firms more than large firms. Based on a sample of 36 engineering industries and using two distinct time periods between 1976 and 1986 and two different measures of what constitutes a small firm, we find that the application of certain flexible technologies, such as numerically controlled machines, has led to an increased presence of small firms, while the use of other flexible technologies, such as programmable robots, is associated with a decreased presence of small firms over time. [ABSTRACT FROM AUTHOR]

COVID-19 led to a massive shutdown of businesses in the second quarter of 2020. Estimates from the Current Population Survey, for example, indicate that the number of active business owners dropped by 22% from February to April 2020. We provide the first analysis of losses in sales among the universe of businesses in California using administrative data from the California Department of Tax and Fee Administration. Losses in taxable sales average 17% in the second quarter of 2020 relative to the second quarter of 2019 even though year-over-year sales typically grow by 3-4%. We find that sales losses were largest in businesses affected by mandatory lockdowns such as accommodations, which lost 91%, whereas online sales grew by 180%. Placing business types into different categories based on whether they were considered essential or nonessential (and thus subject to early lockdowns) and whether they have a moderate or high level of person-to-person contact, we find interesting correlations between sales losses and COVID-19 cases per capita across counties in California. The results suggest that local implementation and enforcement of lockdown restrictions as safety measures for public health and voluntary behavioral responses as reactions to the perceived local COVID-19 spread both played a role. Plain English Summary: Business sales dropped by 17% on average due to the pandemic during the second quarter of 2020 in California. Accommodations lost 91% of sales, whereas online sales grew by 180%. Sales fell more steeply in counties with more COVID-19 cases. We examine how much businesses lost in sales using administrative sales tax data. The average losses of 17% in the second quarter of 2020 relative to the second quarter of 2019 occurred even though year-over-year sales typically grow by 3-4%. We find that sales losses were largest in businesses affected by mandatory lockdowns such as accommodations, drinking places, and arts, entertainment, and recreation. Distinguishing between essential and nonessential businesses, which were subject to early lockdowns, and by the level of person-to-person contact, we find that local implementation and enforcement of lockdown restrictions for public health safety and voluntary responses to the perceived local COVID-19 spread both played a role. The results suggest that small businesses may need more support from governments and consumers to mitigate the strong shift to online vendors, and that the pandemic must be brought under control as a prerequisite to a full recovery. [ABSTRACT FROM AUTHOR]

Focuses on business survival and the success status of closed businesses. Introduction to literature and hypothesis; Comparison of models of business survival and business success; Factors for the survivability of a business; Summary of data and model of closures for new firms; Future research opportunities of the study.

Presents a study that provided a comprehensive insight into the role that unemployment plays in influencing firm formation. Effects of unemployment on the likelihood of founding a business; Information on the model, data and variables used in the study.

Features a study which investigated the performances of new businesses in Scotland. Significance of planning and goals; Methodology; Results and discussion.

The demographic changes that have taken place throughout the twentieth and early twenty-first century confirm the increase in the number of older adults. More older adults implicitly entail an increase in the number of people in a situation of dependence. The issue of long-term care has economic, social and health care implications. This article addresses the characteristics of the companies involved in long-term care services and the employment generated. The database of the Spanish Directory of Companies (DIRCE) provided information on the variables used in the analysis: companies created, employment generated, companies by legal status and territorial distribution of the companies. Noteworthy findings were that the long-term care service sector contributes more to creating jobs than other economic sectors and that third sector companies are important in providing long-term care services. [ABSTRACT FROM AUTHOR]

This article investigates the impact of perceived age norms on the formation of entrepreneurial intentions in the third age. Age norms refer to those social norms that determine whether establishing and running a business are considered appropriate behavior for a mature individual. An empirical analysis of Finnish individuals finds that norms perceived as permissive of enterprising activity in the third age exert a significant positive influence on entrepreneurial intentions in this segment, even when controlling for the general level of entrepreneurship in the municipalities. This influence is partially mediated by whether the individual has a positive attitude toward entrepreneurship, by how the individual perceives their own ability to start and run a business, by the extent of support from their family and friends they perceive and by the importance of that support to them. Thus, if policy aims to increase enterprising activity in the third-age segment, the portfolio of instruments should include measures that address people's general awareness of third-age entrepreneurship as a viable, positive and attractive late-career option. [ABSTRACT FROM AUTHOR]

This article analyses the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of 11 Sub-Saharan African countries. The focus of the article is on identifying those entrepreneurs’ attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are especially characterized by higher growth rates and also display a distribution of growth rates skewed to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects they generate in creating wider input and output markets. Education raises growth opportunities by affecting the lower quantiles, but it does not appear to influence the upper quantiles. The estimated conditional growth distributions for the technology-intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries, indicating the more risky nature of doing business in these industries. [ABSTRACT FROM AUTHOR]

Employing both behavioral decision making and agency theories, our study seeks to identify those factors that influence a venture capital (VC) firm’s decision to undertake seed capital investments and, subsequently, the scale of such activity. Using data on the investments made by 2949 VC funds raised worldwide between 1962 and 2002, we find investor age, timing of investment, and fund location to be of importance. In addition, the size of the fund and the existing number of portfolio firms exert opposite influences on the level of seed capital activity of the VC firm. These results suggest that seed activity is a valuable source of market intelligence for leading VC firms seeking proactively to identify and invest in novel technologies. [ABSTRACT FROM AUTHOR]

How do entrepreneurs experience entrepreneurship, and what are the implications? The cognitive and emotional experiences of the entrepreneur as he/she performs the tasks associated with venture creation and high growth have received limited attention from researchers. The entrepreneurial context can be characterized in terms of peaks and valleys, or periods of relatively high pressure, stress, uncertainty, and ambiguity and periods of relative stability and predictability. Three inter-related psychological variables are investigated to determine their applicability in an entrepreneurial context: peak performance, peak experience, and flow. Results are reported of a series of in-depth, structured interviews conducted with two samples of entrepreneurs. Both qualitative and quantitative evidence is provided of the relevance of all three variables to entrepreneurs, with the highest scores for each variable demonstrated by entrepreneurs in high growth ventures. A number of implications are drawn for ongoing research and entrepreneurial practice, most notably in the area of entrepreneurial motivation. The findings suggest that entrepreneurship be approached as a vehicle for optimal human experiencing. [ABSTRACT FROM AUTHOR]

The Global Entrepreneurship Monitor research program was designed as a comprehensive assessment of the role of entrepreneurship in national economic growth. The conceptual model reflected in a wide range of factors associated with national variations in entrepreneurial activity and the major contextual features. Empirical tests of the many relationships in the model required four major data collection activities: adult population surveys, unstructured interviews with national experts, self-administered questionnaires completed by national experts, and assembly of relevant standardized measures from existing cross-national data sets. Adult population surveys were implemented to identify those entrepreneurially active, which required a set of precise criteria and careful processing to ensure harmonized counts and prevalence rates across 41 countries. Existing evidence on measures of reliability indicates that the measures met contemporary standards and the project was cost-effective. [ABSTRACT FROM AUTHOR]

A growing body of literature suggests that variations across countries, in entrepreneurial activity and the spatial structure of economies could potentially be the source of different efficiencies in knowledge spillovers, and ultimately in economic growth. We develop an empirical model that endogenizes both entrepreneurial activity and agglomeration effects on knowledge spillovers within a Romerian framework. The model is tested using the GEM cross-national data to measure the level of entrepreneurship in each particular economy. We find that after controlling for the stock of knowledge and research and development expenditures, both entrepreneurial activity and agglomeration have a positive and statistically significant effect on technological change in the European Union. [ABSTRACT FROM AUTHOR]

Using a large sample of individuals in 28 countries, we investigate what variables are significantly correlated with an individual’s decision to become an entrepreneur. Following existing literature in economics, we link such a decision to demographic and economic characteristics. In addition, we argue that perceptual variables such as alertness to opportunities, fear of failure, and confidence about one’s own skills are also important. Our results suggest that perceptual variables are significantly correlated with new business creation across all countries in our sample and across gender. Although our data do not allow the identification of causal relationships, our findings suggest that, when making decisions, nascent entrepreneurs rely significantly on subjective and often biased perceptions rather than on objective expectations of success. Thus, perceptual variables should be included in economic models of entrepreneurial behavior. [ABSTRACT FROM AUTHOR]

Using a comparative case study approach, this article presents three of thirty-two findings on Small Plastic Manufacturing Firms' and Entrepreneurs in Nigeria. The selected firms represent performance differences between firms that have received external support and those that did not. Due to lack of support, some entrepreneurs had to independently sustain themselves through their creative abilities. Findings from the study revealed that Small Plastic Manufacturing Entrepreneurs in Nigeria are constrained by certain external and internal factors. Ironically, these constraints seem to have challenged some entrepreneurs to invent original strategies on their own, to cope, survive and to remain in business.

Focuses on a study that described the evolution of networks during the first 3 years after start-up of a new business enterprise and the nature of networks of firms after 3 years. Inclusion of both temporal change and spatial variation on the analysis of the longitudinal dataset; Analysis of the characteristics of nature of business relationships; Effects of gender, education, innovative firm behavior, region and sector on the nature of firm networks after start-up.

Presents a study that analyzed the role of social capital in local and regional entrepreneurship. Comparison between social capital and other forms of capital; Outline model of how the spatially-defined producer surplus form a place surplus, and of the role played by social capital in the creation of producer surplus; Discussion of social capital in inter-firm relations and the entrepreneurship-inhibiting and -facilitating aspects of social capital; Formal economic modeling approaches to theoretical relationship between social capital and entrepreneurship.

Presents a study aimed at developing the concept of an International Entrepreneurship Knowledge Network for its usefulness both to practicing entrepreneurship and scholars. Theoretical development of knowledge networks; Relevance and the relationship of an International Entrepreneurship knowledge network to scholarship and practice in the field; Results of an epistemological bibliometric research on the emerging field of International Entrepreneurship.

Focuses on a study which analyzed the relationship between economic growth and growth in income terms of trade. Effect of growth on international trade; Information on the income terms of trade; Trade expansion without falling terms of trade.

Presents information on a study which examined the personal strategies and performance of small business start ups. Psychological strategies in entrepreneurship; Proposed psychological strategies and their relationships with performance; Uncertainties of small start up companies.

Presents a study on the accessibility of external credit finance to small businesses in the United States during the late 1980s. Development of the framework used for the analysis; Estimation of credit rationing; Results and conclusion.

Analyzes turbulence and problems facing the business structure of industries. Evolution of economic activity; Market competition and evidence of productivity improvements; Rates of gross entry and exit of manufacturing industries; Technical progress and business turnover in manufacturing activities.

Davis, Haltiwanger and Schuh (1996) claim to dissect the myth and reassess the facts on the job creation prowess of small businesses. We disagree with the authors. In this comment we discuss their five chief findings and conclusions and in particular, the use of a "regression-to-the-mean" correction. [ABSTRACT FROM AUTHOR]

An empirical test is provided of the effect of the degree of obsolescence on the effect of firm size and monopoly profits on a firm's ability to innovate. Recent theory suggests that innovation depends on firm size and monopoly profits only if the firm conducts product improvement as well as new product innovation. This is due to the allocation of limited entrepreneurial attention between improving current products and innovating new products. Current products are subject to obsolescence and innovation requires technological opportunities. The firm conducts product improvement as well as new product innovation only if the degree of obsolescence is sufficiently low relative to the level of technological opportunity. This theory provides an explanation for previously unexplained empirical observations. We find preliminary support for the hypothesis that product improvement reduces the positive effect of firm size on new product innovation and sufficient product improvement may reverse the negative effect of monopoly profits on new product innovations. In addition, product improvement reduces the positive effect of technological opportunity on new product innovation. [ABSTRACT FROM AUTHOR]

In our generalized TOBIT analysis we identify a number of variables which have an impact on a firm's innovation "output". Among others we find that larger firms generally have a higher probability of selling some innovative products, although this probability increases less than proportionately with firm size. Given that a firm has some sales of innovative products, the share of such products in a firm's total sales tends to be higher in smaller firms. Moreover, a strong small business presence in a sector seems to enhance imitative innovation but has no influence on "true" innovations, whereas market concentration has no influence on innovation "output" in whatever definition. We also find evidence of regional knowledge spill-overs. Furthermore, our results are consistent with Schmookler's hypothesis that the growth of demand enhances innovation. The outcomes about the impact of R&D collaboration and technology transfer on innovation remain ambiguous. [ABSTRACT FROM AUTHOR]

In the market of business services the easier segment of large business is being saturated. Therefore, suppliers of business services must seek to cater to the growing but more difficult segment of small business, if their growth is to be maintained. With appropriate extensions, Transaction Cost Economics can facilitate understanding of the nature of the difficulty involved. Due to effects of scale in transaction costs it is relatively more expensive to provide services tailored to the individual smaller firm. Standardisation of services may be required to make access to this market viable. The question arises whether such standardised methods should be stimulated by the government. To see how this issue is perceived by suppliers of various business services, a survey was conducted on a sample of 1.000 firms, with a response of 30%. The issue of economies of scale in transaction costs did emerge, but was not universally perceived as a problem. Many respondents confirmed the need for standardised modules. Opinions were sharply divided on the issue whether the government should step in to promote standardisation across suppliers. Cluster analysis shows that respondents fall neatly into a number of classes that conceptually and statistically are highly distinct. Just over half of the respondents were clearly against government intervention, and about one third of these ("radical market proponents") were of that opinion even though they granted that the scale issue constituted a problem of access to the small business market. Just under half of the respondents clearly favoured government intervention, and about half of those ("radical interventionists") were of that opinion even though they saw no great problem of access due to problems of scale, or were hesitant about that problem. Accountancy firms tended to be in favour of intervention, and business consultants tended to be against. The government might explore the matter further with accountants, while leaving the business consultants alone. [ABSTRACT FROM AUTHOR]

Comparisons across different national economies can make a major contribution to understanding the role of entrepreneurial activity and new firm foundings in economic growth and change. At least four cross-national strategies are possible: (1) direct comparisons; (2) historical or time series correlations; (3) comparison of cross-market analyses; or (4) comparison of cross-regional analyses. The distinctive value of cross-regional analyses is considered and illustrated with a comparison of the effects of manufacturing births on economic growth in the U.S. and Japan. [ABSTRACT FROM AUTHOR]

In an innovation survey in the Netherlands, we find considerably more SMEs which perform small scale R&D than are found in the official R&D surveys. Nonetheless, SMEs appear on average to be somewhat less R&D intensive than large firms. Only when we restrict our observations to firms which perform some R&D, there is no systematic relationship between size and R&D. Among the barriers to innovation the following are particularly important to SMEs; information deficits with respects to instruments of innovation policy; a lack of capital; a lack of management qualifications; problems in finding adequate technical information, and problems in finding qualified employees. [ABSTRACT FROM AUTHOR]