As small businesses struggle to stay afloat through the recession, expect their leaders to pave the way in boosting productivity and innovation.

A recent study of over 100 firms, sponsored by software firm Intuit and conducted by consulting firm Emergent Research, concluded that it's not just the high-tech, big-budget research projects that are leading the way in innovation but small businesses are equally creative on a day-to-day basis. The study found that small businesses have the ability to apply creative solutions to productivity problems and quickly reinventing their business processes when necessary.

Steve King, a partner at Emergent Research, says small businesses are natural innovators because of their size, ability to turn on a dime, and owners' proximity to customers.

"Small businesses are quick to identify opportunities or problems and then quick to respond with changes in their processes," he said. "There are a lot of small business innovations we could take to big businesses," King added.

Capital-intensive efforts to invent products that create whole markets, which are dominated by large corporations and VC funding, will slow during the recession, predicts Kind. But he expects innovation at the application level—where small businesses excel—will skyrocket, as owners struggle to do more with less.

"There's another group [of small businesses] saying that this is a great opportunity to gain market share, and they're trying to be very innovative about how they do it," King said.