Determinants of innovation in Knowledge Intensive Business Services (KIBS) SMEs: some implications for de-industrialised regions in the UK

The paper explores determinants of innovation capability in small Knowledge Intensive Business Services (KIBS) in two UK regions, the North East and West Midlands. Innovation is supported by higher levels of investment in R&D as well as more frequent interaction with local business networks, including informal contacts, and national licensing arrangements. Innovation capability is also enhanced by internationalisation through both traded and untraded relationships. Various industry-specific business networks and regional government agencies also act as important sources of knowledge and networking in de-industrialised regions. No support is found for benefits arising from the clustering of firms in similar line of business, or from close local customer relations.