Innovation is widely recognized as a key factor in the economic development of nations. Innovation is also essential for the competitiveness of firms. Its importance is intensified by factors like the increased global competition, the decreased product lifecycles and the rapidly changing consumer demands. Large firms play a key role in innovation but this doesn't mean that there is no place for SMEs. In the last years the environment for innovation has changed. The importance of SMEs to the innovation process has increased. The increasing incomes, the more "Niched" market demand and the changing technologies have reduced the structural disadvantages of SMEs firm size. In this paper, the authors examine the role of the Greek SMEs in innovation generation.