The issues addressed in this thesis concern the role of SMEs in perspective of the technological change that has occured in the last decades, and the increased internationalization of economic activities. Traditional ways of organizing industrial production have undergone dramatic and rapid changes during the last decades.

Vertically integrated firms and Tayloristic structures have increasingly been replaced by organizations characterized by networks, clusters, and other informal cooperation between economic agents founded on mutual trust and interdependence.

Such reorganization of industrial production opens up new opportunities for small and medium sized firms, but also put these firms´ abilities to respond to the new challenge to a severe test. In particular, the internationalization of production that emanates from the dismantling of trade and investment barriers, in addition to advances in information technology, will stiffen the competition of previously sheltered markets. Differences in prices and qualities will become more transparent, and the prospects for firms that fail to cope with these new conditions and requirements are bleak. Hence, a continuous upgrading of the firms´ knowledge capital in terms of R&D capacity, marketing knowledge, and a skilled work force will become crucial ingredients for firms to remain competitive, irrespective of size.