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396 J. Siikonen et al.
generally related to their capability to create, transfer and exploit innovations (Autio,
1998; Fontes, 1997; Kuratko and Hodgetts, 2001). In addition, growth-oriented small
firms have a strongly positive effect on employment in their respective regions (Storey,
1994). However, innovation literature has previously focused mainly on innovation by
and in large firms (e.g., Woodcock et al., 2000), and relatively few empirical studies have
focused on innovation in small firms (Gudmundson et al., 2003).
Innovation and renewal of organisations are regarded as providing a basis of
competitive advantage; the means by which organisations anticipate and meet customer
needs, and the method by which organisations utilise technology (Schumann et al., 1994).
Further, innovation is expected to play an increasingly crucial role in determining
organisational success (Tushman, 1997). For instance, Kanter (1997), Kao (1997) and
Tushman (1997) have argued that the ability of organisations or companies to innovate is
one of the key competitive capabilities that organisations must acquire to be competitive
in the 21st century, and Lengnick-Hall (1992) has demonstrated a connection between
innovation and sustainable competitive advantage. Indeed, it is argued, firms need to
develop new products and services through active renewal and innovativeness to gain (or
maintain) competitive advantage due to the continuous change of the environment (Abell,
1999; Lengnick-Hall, 1992). However, innovation and the maintenance of competitive
advantage are not solely driven by firms’ internal resources. According to Oerlemans et
al. (2001) “innovation output depends on the presence and volume of innovation
resources and the utilisation of the internal and external resources in the innovation
process”. KIBS can play important roles in this, since they are private companies or
organisations that provide intermediate products and services to other companies and
organisations, based on high-level knowledge and expertise related to specific (technical)
disciplines or functional domains (den Hertog, 2000; Hermelin, 1997; Miles et al., 1995).
One of the important characteristics of KIBS firms from a regional development
perspective is that they employ unusually high proportions of graduates, trained in
various disciplines (Miles, 2005), which is not surprising since KIBS have been defined
as services that involve “economic activities which are intended to result in the creation,
accumulation or dissemination of knowledge” (Miles et al., 1995) and they “can be
described as firms performing, mainly for other firms, services encompassing a high
intellectual value-added” (Muller, 2001). At a general level, KIBS can be divided into
two groups: traditional professional services/non-technological KIBS (KIBS class I,
P-KIBS; e.g., accountancy and bookkeeping, legal services, marketing and advertising,
management consultancy and labour recruitment services) and new technology-based
KIBS, KIBS II or T-KIBS (e.g., computer and information-technology-related services,
technical engineering services, privately funded research and development services) (see
Miles et al., 1995; Werner, 2001). This study focuses largely on the latter.
KIBS can play multiple roles in the national innovation system (see, for example, den
Hertog, 2000; Miles, 2003; Muller and Zenker, 2001) to which they may contribute by:
1 creating and exploiting their own innovations (Muller and Zenker, 2001; Wong and
He, 2002)
2 enhancing their clients’ innovation processes through inputs of external knowledge
(see Hipp, 2000; Machlup, 1962)
3 acting as intermediaries by integrating complementary knowledge and resources
from several firms or organisations in order to create innovations (Toivonen, 2004).