This research focuses on the challenges faced by small and medium sized companies (SMEs) in New Product Development and the importance of the external network in this situation. The literature clearly identifies the internal and external organization as two factors that influence innovation performance. Literature mainly addressed the internal organization, but in an increasing degree also the external organization. Companies are no longer individual entities, but are rather actors that operate in a shared system with other companies and stakeholders. This movement is also reflected in this research, as we start off by studying the internal organization in a pilot study. Based on the findings from the pilot study we shift the focus to the external organization. Both quantitative and qualitative data from Dutch medical devices SMEs is used to empirically examine combinations of network characteristics that lead to high innovation performance. In this research, we 1) develop a measurement instrument for simultaneous measurement of several network characteristics and innovation performance, 2) study the relation between network characteristics and innovation performance and 3) examine which specific combination of network characteristics is related to high innovation performance. The research leads to new insights for both network and innovation management literature and offers practice a benchmark tool.