Abstract
This research represents an empirical evidence of how internal capabilities and the use of technological opportunities, act as key determinants of innovation in SMEs. 
The analysis is based on a sample of 138 enterprises (SMEs) belonging to the metal-mechanical sector, located in the province of Alicante. The results show how companies exposed to the same technological opportunities do not get the same benefits for them, because they have different abilities to identify and exploit the knowledge flows, due to different absorption capacities. 
In the analysis, three strategies for acquiring external knowledge (cooperating, buying and relational capital) have been considered. As cooperation: industry (clients, suppliers and competitors), non-industrial (private agents) and non-industrial scientific and technical (universities and technological institutes) agents; as buying: the use of external R&D, purchase of R&D already done and the purchase of technology (equipment, machinery and software) and as a business capital, attendance at industry events and membership in associations related to business. 
In a first step, the influence of the development of internal R&D and the impact of the use of technological opportunities in innovation performance, are analyzed separately. From the individual study, the possible effects of substitution and complementarily, between internal capabilities and technological opportunities, have been also studied. Subsequently, we measured the influence of internal capabilities (absorptive capacity) in the exploitation of technological opportunities in support of innovation results. This analysis was conducted in two stages. In the first stage, different levels of internal capabilities multigroups are defined (based on internal R&D frequency and academic training of employees), to analyze how absorptive capacity determines the kind of strategies that relate with innovation performance. In the second, the effect of absorptive capacity, through the absorption effect created from absorption variables, is examined.
Additionally, two external aspects are been analyzed: the innovation performance of firms in relation to the technological level of its customers and suppliers and the extent of the value chain. The analysis of the extent of the value chain, lies on analyzing how the globalization of the value chain (customers and suppliers), as geographical spread of customers and suppliers (national and international), compared with inbred relations in the territory (regional), interact with innovation performance. 
A linear multiple regressions were run to understand the contribution of each variable, representing the internal and external resources, and the external variables, on innovation. The models utilized were tested using stepwise regression. Additionally, other multivariate analysis technique, such as mean differences calculations, has been used.
Keywords: innovation in SMEs, internal R&D, technological opportunities, absorptive capacity, technological level of customers and suppliers, geographical extent of the value chain.