Innovation modes in micro firms: evidence from Portugal

Micro firms are central to European economies but remain underrepresented in research on innovation modes. This paper investigates how these firms combine different innovation practices and how such combinations are associated with diverse innovation outputs. Drawing on original survey data from Portuguese micro firms, the study adopts a three-step empirical approach. First, descriptive analysis reveals that innovation in micro firms is more widespread and diverse than commonly assumed. Second, principal component analysis is used to identify distinct patterns of co-occurring innovation practices, capturing how firms combine STI (Science, Technology, and Innovation) and DUI (Doing, Using, and Interacting) practices. The results show that innovation is not structured around discrete modes, but rather around heterogeneous configurations of practices. Third, regression analysis examines the relationship between these configurations and different innovation outputs, showing that specific combinations are more strongly associated with particular innovation outputs. The findings contribute to the literature on innovation modes by offering a more nuanced empirical representation of how innovation practices are combined within firms. By focusing on micro firms, the study also extends empirical evidence to a highly relevant yet understudied segment of firms, providing insights for both research and innovation policy.