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- This work provides results from a survey based on a very large sample (25,000 firms) of Italian manufacturing firms carried out by MET in 2008. This survey, completed straight before the deepening of the financial crisis, aims to offer a detailed picture of the Italian industrial system with its regional, dimensional and sector-based variability. We show some evidence related to innovation and R&D activities. Intense heterogeneity among Italian regions is identified (other than north/south dualism). The main contribution of the work is to provide some measures of innovation and R&D for the smallest firms. Firm size is particularly relevant in explaining the intensity of R&D and the spread of innovation. Nevertheless, there is a key role of small firms in explaining the aggregate innovation performance both at regional and national level. Strong links between Innovation, R&D and Internationalisation are confirmed. R&D activities among small firms have specific characteristics: external research is widespread with an important role played by laboratories shared with other firms.