The rationale and policy proposed by two collaborating projects is to increase innovation through improved connectivity among SMEs within Northern European supply chains. To inform project policy, we test the hypothesis "improvement in broadly defined connectivity as online business activity, investment abroad and technical cooperation abroad are associated with enhanced product or service innovation." We test this hypothesis by referring to the EIM Business and Policy Research [EIM Business and Policy Research (2009). Available at http://www.panteia.eu/nl/Projects/reference-archive-SMEs.aspx data set relating to the period 2006 to 2008. We carry out exploratory and probit analysis to identify a strong link between connectivity factors and increased product or service innovation. We also make comparisons between the Baltic, North Sea and other European regions with regard to innovativeness, connectivity and other factors. The Baltic Sea region displays significantly higher levels of innovation and technical cooperation abroad than other European regions, while online business activity is more prevalent in the Baltic and North Sea than in the other regions.