While a large number of studies have examined predictors of innovation in large firms, relatively few studies have examined predictors of innovation in smaller firms. This is true despite the fact that innovation processes in smaller firms tend to be much less structured and are more constrained by resource scarcity. This study examines predictors of product innovation in a group of small firms. Findings indicate that, while, proactive entrepreneurial strategies and more organic organizational structures were positive predictors of product innovation, availability of resources and perceptions of environmental hostility were not significant predictors of innovation.