Harry,
With respect to the Swedish population overall, Saab's aerospace division could be considered "small and innovative", but with so many 'firsts' behind them since they started building aircraft in the 1930's only a naive person would underestimate Saab's capabilites and experience.
Saab succesfully launched the Scandia 90 airliner in 1946 and in a tough post WW2 market produced 18 airframes with the entire fleet later sold to Vasp in Sao Paulo Brazil. Could this aircraft have led to the genesis of Embraer? Considering this was done immediately after the war and with all the associated shortages of raw materials, manufacturing infrastructure, etc, it was an amazing effort.
Saab also produced the J29 Tunnan in 1948 and it was the first post WW2 swept wing jet fighter in europe.
The Saab 340 first flew in 1983 with the wings originally supplied by Fairchild in the U.S.. Fairchild left the partnership after 40 aircraft and Saab increased their manufacturing capacity to include the wings and produced a total of 459 aircraft.
In all this Saab has experienced the vagaries and disappointments of aircraft manufacturng and profited from some spectacular successes.
For a small country with a total population of less that 10 million Saab certainly qualifies as a "small and highly innovative aerospace company", but they have consistently 'punched above their weight' and achieved success by doing things differently from others. And such differences include sticking with their own perception of what constitutes a market opportunity and identifying the risks involved.