Knowledge is the driving force of innovative small firms in high-tech industries. Knowledge is however context dependent, and varies across regions. This research explores differences and similarities in external knowledge factors accounting for new product innovations between small firms in high and low agglomeration regions. A framework is built in which small firms develop new products in two distinct environments: agglomeration i.e. 'high agglomeration' and regions lacking agglomeration i.e. 'low agglomeration' region. The framework considers external influences on new product innovations...