This study analyzes new co-innovative sources of labor productivity (i.e., ICT use, human capital and training, and
new forms of work organization) in small
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rms that produce for local markets. The study presents an application
of structural equation modeling (SEM) to 2009 survey data for a representative sample of 464 SMEs in the prov-
ince of Girona (Spain). Results show that wage is the main determinant of labor productivity. Furthermore, in
contrast to evidence regarding larger
fi
rms, co-innovation does not directly affect small local
fi
rms' productivity.
The study establishes an indirect relationship between co-innovation and productivity in
fi
rms that initiate inter-
national expansion. The study also identi
fi
es guidelines for public policy to improve productivity in small local firms