measure of the rate of innovation --research-and-development (R&D) expenditure per employee compared to new patents received per employee -- does not adequately capture a unique feature of SMEs, namely that owners and managers are often themselves innovators. For example, in Japan 52 per cent of SMEs' innovations reported in 1986 were created by employers, whereas in large firms 72 per cent of innovations were created by research technicians. Nevertheless, patchy evidence from Germany, the United Kingdom and the United States indicates that SMEs at least hold their own in terms of innovation...

measure of the rate of innovation --research-and-development (R&D) expenditure per employee compared to new patents received per employee -- does not adequately capture a unique feature of SMEs, namely that owners and managers are often themselves innovators. For example, in Japan 52 per cent of SMEs' innovations reported in 1986 were created by employers, whereas in large firms 72 per cent of innovations were created by research technicians. Nevertheless, patchy evidence from Germany, the United Kingdom and the United States indicates that SMEs at least hold their own in terms of innovation...