Upstanding Scandinavian infiltrates work unit producing small bomb (7)
I believe the answer is:
grenade
'small bomb' is the definition.
(I've seen this before)
'upstanding scandinavian infiltrates work unit' is the wordplay.
'upstanding' is a reversal indicator.
'scandinavian' becomes 'dane' (person from Denmark).
'infiltrates' is an insertion indicator.
'work unit' becomes 'erg' (erg is a kind of work unit).
'dane' placed into 'erg' is 'edanerg'.
'edanerg' in reverse letter order is 'GRENADE'.
'producing' is the link.
(Other definitions for grenade that I've seen before include "Pineapple" , "Bomb with a pin" , "Hand-thrown bomb" , "Small explosive device" , "Small hand missile" .)