Strategies to innovate in SMEs: analyzing the key factors of internationalization and interaction in Basque and Sicilian firms

The increasing openness of economies and the phenomenon of globalization has led to know-how and innovation becoming the key factors for business in terms of competitiveness. Thus, the fact that the activities and services are increasingly innovative means that the construction of innovation is channeled through the social sphere, attributing an increasingly importanceand critical role to the field of local development.The exchange of knowledge and experiences between firms and within firms together with a high level of interaction among the agents, that constitute the social and economic environment of a region, becomes a source of competitive advantage and represents a key strategy for the generation of innovation at the firm levels. Internationalization and interaction for SMEs represent action strategies in an increasingly complex environment where territory plays a key role. The geographical areas with all their knowledge and experiences present in their context are the source of tacit knowledge that determines the competitive advantage of the new millennium. In this paper westudy and analyze the predictors of innovation generation in SMEs, demonstrating the relevance of internationalization and cooperation strategies in Basque and Sicilian firms comparing the two experiences. SMEs constitute the majority productive Basque and Sicilian territorial reality and their impact on the local economy is crucial for the development of the two regions.