This paper considers technology diffusion and develops a model at the level of the small firm in Wales. Technology diffusion, in the form of new or improved technology, and the transmission of knowledge or technical expertise are considered. This involves spill-overs through formal and informal networks, enabling learning by interacting, and an absorptive capacity to assimilate new technology developed elsewhere. A temporal model of technology diffusion is developed including external sources, channels of technology transfer, and mechanisms involved in the transfer of technology into the innovative small firm. The model is related not only to ‘best practice’ but also to cases in which ‘low’ activity can be improved. The implications for policy relevant to technology and entrepreneurship that arise from the model are also investigated and conclusions are drawn.
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