The effect of regional resources on innovation: a firm-centered approach

Abstract

The current environment of high competitiveness has made innovative frms, especially job-creating ones, central to regional economic growth. Most of previous studies have not considered the interactions between internal and regional factors, and has focused on product innovation performance. This paper aims to fll both gaps in the literature on the regional determinants of frm innovation. Assuming a frm-centered approach, the main goal of the paper is to analyse whether the regional resources determine frm innovation either in a direct way or by shaping the efect of the frm’s internal resources. We used multilevel modelling and panel data methodology in a sample of 2141 Spanish manufacturing frms over the period 2008–2014. More specifcally, we assume fxed slopes and estimate a three-level logistic random intercept models (observations: level 1; frms: level 2; regions: level 3). Our results show that the internal factors are the cornerstone of frm innovation. Nevertheless, there is also a ‘regional efect’ in the frms’ propensity to innovate. Particularly, the efect of the region’s resources in explaining the diferences across frms in product innovation is more substantive than in process innovation. In this last case, regional factors play a subtler role by shaping the efect of its internal drivers. Policy-makers should be conscious of the need of keeping a bottom–up approach (or a frm-centered approach) when designing regional innovation policies. In this respect, policies aimed at promoting the size, export activities and R&D intensity of frms could be efective to increase the number of frms that can beneft from the exploitation of the region’s resources.