Technological innovation is a diverse, many-folded and practical technological evolution, stimulating new economic growth and effectively aggrandizing this growth. The most common models are innovation invented and innovation imitated. An enterprise can choose the most suitable model according to its own situations and conditions. However, there are small numbers of Taiwan small and medium enterprises devoting themselves to technological innovation activities, especially in the manufacturing industries. Taiwan enterprises now have recognized the necessity of technological innovation activities in small and medium enterprises. Hence, this paper discusses the various problems and situations small and medium enterprises face during the process of technological innovation in Taiwan.