Innovative SMEs refer here to firms that implemented product and/or process innovations during the period under review (regardless of whether they introduced also organisation and/or marketing innovations). Product innovation is defined as the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Process innovation is defined as the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software (OECD/Eurostat, 2005).