Bianca Potì and Roberto Basile developed a model to explain divergences in region/ country propensity to innovation through a system of innovation approach. They started from the idea that externalities and spillovers have positive effects on the innovative performance of firms, and focused on three types of interactions: (1) collaborative and network inter-firms relations; (2) sectoral-regional clusters; and (3) inter-institutional (industry-public research institutes) relations.
The model of innovation is specified as follows:
INNOVATION*ij = + SIZEij + MARKET INCENTIVESij + TECHNOLOGICAL REGIMEij + ORGANISATIONij + SPILLOVERSj + PUBLIC R&Dj +
Where i indicates the firm (i = 1…4,431) and j indicates the province (j = 1 … 95).
The model tested the significance of organisational variables, externalities and public policy variables in explaining differences in firm innovation propensity among less and more developed regions in Italy. Variables on inter-firms organisations, local (subregional) spill-over and policy were added to the Schumpeterian equation on innovation determinants.
The model shows that the relation between innovation and firm organisation (firm external growth strategies) differs among regions. Local spillover variables have a significant impact on the firm propensity to innovate at national level, and it also discriminates among regions. Public support to innovation plays a different role in different regions.
Innovation system analysis seem to be relevant in determining the probability that firms introduce new products on the market and they help discriminating among low and high developed regions.
Source: Potì, B., and Basile, R. (2000) ‘Differences in innovation performance between advanced and backward regions in Italy: The role of firms’ strategies, organizational factors and institutions, ISRDS/CNR and IASE, Roma, Italy (email@example.com / firstname.lastname@example.org)