Taxonomies of patterns of innovation give a dominant role to large firms, and are often based
on empirical studies that exclude micro firms. This paper proposes an empirical taxonomy of
the innovative firms at the bottom of the size distribution, based on a new survey of 1,234
small firms and micro firms in the Netherlands, in both manufacturing and services. These
firms differ not only in their innovative activities, but also in their business practices and
strategies – such as management attitude, planning and external orientation – that they use to
achieve innovation. The taxonomy identifies four categories of small innovative firms:
science-based, specialised suppliers, supplier-dominated and resource-intensive. It suggests a
more diverse pattern of innovation of small firms than in Pavitt’s (1984) taxonomy, a pattern
that is shared by both manufacturing and services firms. Finally, the research shows that
taxonomies can be effectively used to map differences in the rates, sources and nature of
innovation, with the differences in the business strategies of innovative firms.