Innovative small firms tend to emerge and thrive in sectors where knowledge, creativity, and rapid technological change are key drivers of growth. These sectors often have lower entry barriers in terms of capital but require high intellectual input and adaptability. Based on that, the most appropriate sectors are:

• I. Knowledge-based services:
  This includes fields like consulting, digital services, analytics, and education tech. Such sectors rely heavily on human capital, innovation, and problem-solving — making them a natural fit for small, agile, and innovative firms.

• III. Information technology:
  IT is a sector where innovation is constant and small firms often lead with new software solutions, platforms, and services. Startups in areas like app development, cybersecurity, and cloud computing are typically small yet highly innovative.