Examining the urban network planning instituted in the new regional planning policy (1993) of Germany, I remarked the fact that small and medium-sized firms did not intend to participate in it (Morikawa, 1999). What is the reasons? What kind of interfirm networks do small and medium-sized firms generate? Therefore, I will examine the present situation of studying, especially innovation-oriented, interfirm networks in Europe in order to resolve the above questions. This paper aims to review the studies of interfirm networks of small and medium-sized firms in Europe, in connection with the concepts of flexible specialization and vertical disintegration occurring in the shift to post-Fordism. The findings are as follows: Under the hypothesis of flexible specialization Scott (1988) urgued the formation of new industrial spaces such as Silicon Valley and Third Italy as well as large metropolitan regions based on transaction cost analysis. There, interfirm networks of small and medium-sized firms seen to be generated in favor of local milieu and industrial districts where the contact of managers and managing engineers of each firm can usually be conducted. But I am skeptical of explaining the shift to post-Fordism by considering preferably the matter of new industrial spaces with insufficient refering to the changing old industrial areas and the growing multinationals. Although numerous interfirm networks have recently been developed as innovation-oriented, we cannot recognize that they tend to be increasingly developing in future, such as represented in Third Italy and Neckar-Alb regions. At present, both regions are rather confronted with the changing structure. I presume that insufficient attention has been paid to the sustainability of flexible production until today. At the same time, interfirm linkages are usually generated not only in local and regional level but also in national level, because each firm is technologically so specialized that it cannot ask for innovation co-operation with firms each other in spatial proximity. Consequently, spatial extent of firms consisting of networks may not probably in most cases correspond to that of the urban networks, though spatial extent of them is not clearly illustrated in previous studies on interfirm networks. Although interfirm linkages are attached importance to innovation of small and medium-sized firms, larger firms are more frequently favored by networks for innovation than small firms, unlike the theoretical thinking. The concepts derived from such studies were quickly transformed into regional policy strategies, different from regional planning policy (Raumordnungspolitik), in Germany. Networks and co-operations almost became key words for successful regional economic development. But a interfirm network is no paracea. Grotz and Braum (1997a) emphasized that there is a real danger of enhancing provincial thinking in the practice of regional economic development policy.