Industrial Innovation in the Small Business Sector: Empirical Evidence from Metropolitan Toronto

In this paper, the author examines some of the key technical relations which exist between small industrial firms and knowledge-intensive units in the producer services. Particular attention is focussed on patterns of task-specific subcontracting in which small manufacturers delegate specialised technical functions to external consultants. Data from a sample of small firms in a variety of Toronto industries are used to illustrate the scale, nature, and effects of current linkage arrangements. A major finding of the empirical work is that those firms who have strong backward links to the producer services exhibit above average performance with respect to export intensity and product innovation. The paper is concluded by a discussion of some of the main questions of research raised by the growth of service-to-manufacturing linkages in large metropolitan areas.