The book investigates the meaning, nature and consequences of innovation interactions between small and medium-sized manufacturing enterprises (SMEs) and knowledge-intensive business services (KIBS). It focuses on the concept of a virtuous circle linking KIBS' and SMEs' innovation capacities in Germany and France. A particular emphasis is given to the question of the role and nature of the knowledge base of the firm in an evolutionary perspective. The integration of the spatial dimension strengthens the examination. For this purpose, a new data analysis methodology has been developed. This methodology consists of a combination of complementary statistical procedures, which provides a tool allowing a reliable examination of the data collected. The samples considered in the analysis constitute a source of rich, complex, and diversified information.