Data on the establishment and growth of small firms in Norway between 1976 and 1985 are used to study changes in the spatial division of labour. New and expanding firms in rural areas are mainly found in labour-intensive manufacturing, construction and consumer services. In the large cities, and particularly in the capital region, a much larger part of the growth takes place within new, knowledge-intensive sectors. This new division of labour reflects important structural changes in industry, with growth in service activities and decline in manufacturing. Know-how, as a ‘new’ requirement of production, is regarded as the most important factor for the emerging spatial division of labour.