Small firm-large firm relationships and the implications for small firm innovation: what do we know?

This paper provides a review of existing research on small firm-large firm (SF-LF) interactions for innovation structured around a new typology of linkages. Such linkages are important in local and global supply chains and in terms of public policy initiatives in areas such as procurement. The typology distinguishes between Supply-chain or vertical relationships which originate with the flow of material goods but which also create opportunities for innovation; and, knowledge creation and exchange or horizontal relationships that are created specifically to co-produce or access the knowledge necessary for innovation. Significant case-study and supply-chain analysis does exist but broader econometric or statistical analysis of SF-LF interactions is limited, in part due to limitations in most innovation surveys such as the Community Innovation Surveys. The review leads to an agenda for future research.