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O-088Key Ingredients of Innovation: the Case of SMEs in EnglandPooran Wynarczyk, Newcastle University Business School, UKIt is almost universally accepted that technological advance and innovation are the most important sources of productivitygrowth, competiveness and social and economic wellbeing (Edquist and McKelvey, 2000; Wynarczyk, 2007). Novel and hightechnologyproduct developments are seen as an effective way of giving companies a leading edge over competitors and opennew and niche markets (Lawson and Longhurst, 2006). Increasingly research and policy attention has come to focus on theinnovative small and medium-sized enterprises (SMEs) as a key source of employment and economic potential. InnovativeSMEs appear, therefore, to be vital parts of a dynamic process of national and regional economic development (Wynarczyk andThwiates, 2000). The SME’s capacity for innovation and new product development has become a focus of EU, national andregional SME policies (e.g., Gray and Allan, 2002). Evidence appears to justify the desire for improved technological performancein many firms, individuals, industries and economies and the needs to identify and support those factors capable of 'makinga difference'. As a result, extensive encouragement takes place in terms of, for example, R&D collaboration and technologysharing between firms and with other sectors such as the university (e.g., Narula, 2002). The importance of infrastructure --hardand soft elements-- to support innovative activity at the national, regional or firm level is acknowledged but creativity remainsessentially a human activity whether as an individual working alone or in a team, whether in the public or private sectors.Fundamentally, it is people who create knowledge, manage businesses and innovate (Science and Innovation White Paper,2008). However, while the lone inventor remains an important player in the technological process, in today's world it increasinglymeans the well-educated and trained professional employee (Freeman 1971) working in research teams.This paper builds upon a recently completed project sponsored by the Economic and Social Research Council (ESRC) Sciencein Society Programme. The empirical investigation is based on a in-depth survey, via a dedicated questionnaire, of 80 innovativeSMEs operating in several key scientific and technology related sectors (e.g., chemical). These firms have been selected onthe basis that in the two years prior to this empirical investigation, they had been involved in new product development andinnovation.This paper aims to identify and analyse the cumulative factors (key ingredients) that contribute to the innovation and newproduct development: activities, processes and capacity building of SMEs. The key findings based on several rigorous, andmulti-variate statistical tests indicate that innovation/ new product development activity of SMEs is a complex and multi- facetedprocess, highly related to and depended upon the cumulative effects of and interrelationship between several key ingredients,including, R&D expenditure, patent, size of the R&D team, R&D grants, as well as a well structured management team withcomplementary expertise. The paper will draw on secondary data sources on patent and R&D activities of SMEs, as well as UKgovernment’s national and regional science, innovation and R&D policies.It is anticipated the key findings will contribute to the development of a more detailed and comprehensive conceptual andcontextual multi-dimensional framework for the understanding and analysis of the process of and capacity for innovation andnew product development of SMEs, in the light of wider government science, innovation and R&D policies. The findings willassist relevant policy makers and business support intermediaries in their efforts to design and implement policies and initiativesdirected at promoting the continued growth of innovative SMEs as the main vehicle for economic regeneration, innovation, socialwelfare, and competitiveness.References- Colin Gray and John Allan (2002), Role of management education in developing capacity for innovation in small firms,International Journal of Entrepreneurship and Innovation Management (IJEIM), Vol. 2, No. 4/5, 2002- Edquist C and McKelvey M (eds) (2000) Systems of innovation: growth competitiveness and employment Volumes 1 and 2.Edward Elgar, Cheltenham, UK.- Freeman C, (1972). The Role of Small Firms in Innovation in the UK Since 1945: report to the Bolton Committee of inquiry onsmall firms. Research Report No 6. HMSO, London.- Lawson, C.P. - Longhurst, P.J. (2006). The Application of a New Research and Development Project Selection Model inSMEs. Technovation 2006, volume 26 issue 2 page 242- Narula, R. (2002). R&D Collaboration by SMEs: new opportunities and limitations in the face of globalisation. Availableonline 28 May 2002.- Wynarczyk, P. (2007) ‘The Impact Gender Innovation on Regional Technology, Economy and Society’. Science in theEconomy and the Economics of Science, ESRC Science in Society Programme, pg. 47- 49.- Wynarczyk, P. (2007) “The Impact of Gender Innovation on Regional Technology, Economy and Society”, ESRC Science inSociety Programme End of Award Report, Award Reference: RES-160-25-0039.- Wynarczyk, P., and Thwaites, A.T., (2000), “The Role of Medium-sized Innovative Manufacturing Firms in Regional EconomicPerformance: Some Evidence from the Northeast Region of England." in New Technology Based Firms at the Turn of theCentury Wim During, Ray Oakey and Michelle Kipling (eds), Elsever Science Ltd, May.Madrid, October 20, 21 & 22 - 2010367