Where are the skills gaps in innovative small firms?

Based on a sample of 245 West Midlands manufacturers, this paper investigates small firms’ perceptions regarding the skills (and skill sources) required to improve innovation. While there are very few observed differences in perception between the more and less innovative firms (the employment of graduates is a notable exception), a number of interesting findings emerge. Principal among these, all firms, regardless of innovative classification, identify enhanced technical skills as the primary means to achieving improvements in innovative output (followed closely by marketing competencies). Improved management skills and, in particular, finance and exporting skills do not rank high on the small firms wish list. Moreover, sample firms overwhelmingly display a preference for improving in‐house skills, rather than increasing the number of specialists or accessing external expertise. To rephrase, there does not appear to be an external “skills shortage” but, rather, an internal “skills gap”.