Doing More with Less: The Disordinal Implications of Firm Age for Leveraging Capabilities for Innovation Activity * by Michael C. Withers, Paul Louis Drnevich, and Louis Marino Innovation requires the entrepreneurial capabilities of opportunity recognition and opportunity exploitation. Such capabilities generally accrue over time from a firm’s cumulative learning and experience. In this study, we theorize that firm age should therefore moderate the firm’s ability to leverage these capabilities for innova- tion activity, such that older firms can obtain higher outputs from their capabilities than younger firms can. We examine this relationship using a sample of 676 small and medium enterprises. We find that when both younger and older firms have highly developed innovation capabilities, older firms appear to enjoy higher levels of inno- vation activity than younger firms do. However, younger firms generally appear more likely to have higher levels of innovation activity than older firms do, when neither firm has highly developed innovation capabilities. We conclude with a discussion of the implications of these findings for research and practice. Introduction Innovation is widely accepted as both a necessary and fundamental function of the entrepreneurial process (Drucker 2002; Fiol 1996; Kirzner 1979; Schum- peter 1934). Within small and medium- sized enterprises (SMEs), innovation is essential to the ability to compete against larger, less resource-constrained firms *We’d like to thank the National Federation of Independent Businesses’ Senior Research Fellow William “Denny” Dennis, Jr. and the staff of the NFIB for supplying the data used in this study and their insights in supporting our analyses. Michael C. Withers is Visiting Assistant Professor, Department of Management, Texas, A&M University. Paul Louis Drnevich is Assistant Professor in Department of Management & Marketing, University of Alabama. Louis Marino is Frank Mason C&BA Faculty Fellow in Family Business and Professor of Entrepreneurship and Strategy in the in Management & Marketing, University of Alabama. Address correspondence to: Michael C. Withers, Department of Management, Mays Business School, Texas A&M University, 4221 TAMU, College Station, TX 77843-4221. E-mail: mwithers@ mays.tamu.edu. Topic of Small Business Research: Small Business Technology and Innovation. Journal of Small Business Management 2011 49(4), pp. 515–536 WITHERS, DRNEVICH, AND MARINO 515