Industrial Innovation among Small and Medium‐Sized Firms in a Declining Region

This paper explores the impact of new technology adoption upon the market performance of small industrial firms. Survey data from a six‐sector sample of Western New York manufacturers are presented. The results suggest a positive relationship between new technology adoption and growth of exports, value‐added, and total sales. A central finding of the study is that flexible manufacturing systems (FMS) confer different types of technical and commercial advantages across sectors. Two broad groups of process innovators are identified: (1) those that adopt new technology primarily to cut unit costs; and (2) those that aspire toward greater production flexibility. The paper concludes with a brief discussion of the regional development implications that flow from the empirical results.