In this study, we use unique purpose-built survey data to show that small food firms are more innovative when externally engaged. To capture this, we apply a broad classification of innovative activities, including new products, processes, markets, organization, and distribution channels, and examine them against types of external interactions. The analysis, an ordered logit estimation, controls for heterogeneity across firms as well as geographic conditions. The results demonstrate a positive relationship between external interaction and firm innovation, though there are differences across types of external engagement and innovation activities. Product innovation benefits from knowledge from extra-regional firms, while several of the other forms of innovation show a positive relationship with support from regional and municipality boards. Additionally, firm collaboration regarding transports and sales enhances most types of innovation, but there are few relationships of benefit with research-intensive organizations. We conclude that, to be effective, innovation strategies of both the firms themselves and policymakers need to consider local context, access to intra- and extra-regional knowledge sources, and what types of innovation activities the firms are engaged in.