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  • Series: New Horizons in Regional Science series x
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Urban Gråsjö, Charlie Karlsson and Iréne Bernhard

Innovations are generated by two types of economic agents: incumbent firms and entrepreneurs. This chapter discusses two specific but interrelated aspects of innovation by these two types of economic actors, namely the role of geography, that is, the location of economic agents, and of open innovation. A successful innovation process is usually an open process, where valuable ideas, knowledge and resources can come from both inside and outside the economic agent. This leads to two fundamental questions: how does openness influence the ability of incumbents and potential entrepreneurs to innovate and to appropriate the benefits of innovation? And how is this ability influenced by the location of incumbents and potential entrepreneurs? By discussing these factors in this introductory chapter, we create a background and a foundation for the rest of the chapters in this edited volume.

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Margherita Russo, Annalisa Caloffi, Federica Rossi and Riccardo Righi

Policymakers worldwide increasingly rely on the funding of innovation intermediaries in order to remedy failures in their innovation systems, including firms’ lack of information about sources of external knowledge and opportunities, lack of adequate competences and skills, lack of productive connections and the lack of formal and informal institutions in the system. To induce intermediaries to satisfactorily address the system failures they are called to confront, policymakers often make their funding conditional on their performance. Building on a case study of publicly funded innovation intermediaries in Tuscany (Italy), we identify several challenges in setting up appropriate performance-based incentives for intermediaries. These involve (i) failure to clearly articulate policy objectives in terms of system failures; (ii) failure to measure the achievement of all policy objectives; and (iii) failure to clearly link performance indicators with policy objectives. Based on the lessons learned from this case, we derive some implications for policy design.

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Helen Reijonen, Jani Saastamoinen and Timo Tammi

The merits of public procurement of innovations (PPI) as a demand-side innovation policy instrument have been identified in both political and academic discussion. In particular, the involvement of small and medium-sized enterprises (SMEs) in PPI could be a valuable tool in promoting SME innovations. As such, PPI could play an important role in the entrepreneurial ecosystem in which interdependent actors collaborate. However, the impact of collaboration among entrepreneurial ecosystem actors in the context of PPI on SMEs’ competitiveness lacks empirical assessment. This chapter addresses this gap in the literature with a survey of Finnish SMEs. We propose a construct for SMEs’ improved competitiveness which can be attributed to involvement in public procurement. A statistical analysis applying a path model suggests that after controlling for firm size and age, innovativeness and industry, collaborating with the public sector customer in developing new products/services, improving production processes and making improvements to existing products/services in response to the public sector customer’s demand is associated with improved competitiveness. As a managerial implication, the results suggest that PPI has merits in promoting the competitiveness of SMEs through innovations.

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Nunzia Carbonara and Roberta Pellegrino

The prevailing view in the studies on Public Private Partnerships (PPPs) is that PPPs can improve the quality and efficiency of infrastructure services and facilitates innovation in infrastructure developments. Although researchers highlight the potentiality of PPP models for stimulating innovation, they do not prove whether and in which conditions the PPP model is capable of developing innovative solutions. This chapter aims at providing answers to the following key research questions: “Which features of PPP favor innovation?” and “How should a PPP be properly structured in order to foster innovation?” With this aim, drawing upon the main streams of studies on innovation, we develop a conceptual framework that identifies PPP factors that foster innovation and then formulate research hypotheses. An econometric analysis is then applied to empirically test the hypotheses. Our results have important implications for the future implementation of PPP projects, showing how PPP features have to be structured in order to foster innovation.

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Fabiano Armellini, Catherine Beaudry and Maria Mahon

Early publications on open innovation identified two syndromes that would prevent companies from adequately adopting open innovation, the NIH (not-invented-here) syndrome, related to the unwillingness to use external knowledge, and the NSH (not-sold-here) syndrome, connected to a negative attitude towards the external commercialization of knowledge assets. Despite these early definitions, current research on the topic has been mostly focused on the absorptive capacity perspective, and less attention has been given to other relevant factors, culture being among them. This chapter addresses this issue, by proposing a regression model that correlates the presence of these syndromes with open innovation organization and the practice of inbound and outbound open innovation. Some of the hypotheses in this model are confirmed, mostly on the side of inbound open innovation, when tested with data from a questionnaire-based survey on the extent of the use of open innovation practices and open business modes in the Canadian aerospace industry.

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Mikaël Héroux-Vaillancourt and Catherine Beaudry

In this study, we validate whether the importance of open innovation activities is related to the innovation performance of Canadian nanotechnology firms. The study used a questionnaire-based survey, answered by 89 firms, to measure key innovation metrics. We used the number of innovations and the quality of the latest innovation as performance indicators to verify if the importance of open innovation affects positively innovation performance. More specifically, we used OLS regressions to determine if the importance of inbound activities, outbound activities, open innovation in general and the use of online open innovation platforms is related to the firms’ innovation performance. Our most interesting results show that the companies with the highest number of innovations have given some importance to outbound open innovation. Furthermore, with the quality of the latest innovation, we found significant inverted U-shaped relationships with the importance given to inbound open innovation and open innovation in general.

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Katia Delbiaggio, Christoph J. Hauser and Michael Kaufmann

By means of Swiss tweet–reply pairs recorded using the Twitter Application Programming Interface (API), we analyze the question of how geographical proximity plays a role in digital communication. Additionally, we investigate how the patterns of Twitter-based communication relate to the functional qualities of space. The results show a strong bias of tweet–reply relationships toward short distances even if we control for age, urbanization or language. While roughly only half of a percent of all messages would occur within the same municipality in a random setting, this was the case for about one-third of all observed Twitter communications. Moreover, the median for tweet–reply distances within Switzerland should have been about ten times larger than observed, if proximity had played no special role. Finally, the degree of urbanization influences the intensity of Twitter-based communication, even if we control for size. The more urbanized a municipality, the higher the probability that a tweet–reply communication will occur.

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Andrew Johnston, Paul Lassalle and Sakura Yamamura

While still in its infancy, the concept of the entrepreneurial ecosystem introduces a number of external factors that influence the new venture creation process, highlighting the fact that this process can involve a myriad of interdependent actors and environmental factors. While this may be a useful development, a lack of clarity as to its extent and make up has led to criticism that it is conceptually ad hoc. In order to address this criticism and contribute to this debate, this chapter draws on Giddens’ structuration approach to build a theoretical framework that captures and incorporates the co-constructed and co-evolutionary nature of entrepreneurial ecosystems, as well as highlighting the co-evolution of agents and structures, and drawing attention to the temporal and spatial dimensions of the ecosystem dynamics. We suggest that this lens could be a useful theoretical tool for considering the dynamics of the entrepreneurial ecosystem.

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Andreas P. Cornett

Entrepreneurship and innovation are central targets in business development initiatives and regional development, nationally as well as on the international and European arena. The project presented in this chapter addresses two aspects. The first is the potential conflict of targets embedded in the aim to improve the economic performance and competitiveness of countries and the need to prevent an increase in regional diversity with regard to growth and wealth. The second is linked to multilevel governance, involving actors from the European level to the local/regional level with competing competencies and resources. First, the current structure and the availability of programs and instruments to stimulate innovation and entrepreneurial behavior are presented. The next section outlines the theoretical framework based on the concepts of New Economic Growth Theory. The fourth section provides an overview of national and regional figures for innovation and entrepreneurship based on data from the Regional Innovation Scoreboard and the Global Entrepreneurship Monitor. The section also addresses the potentials of regional growth initiatives based on entrepreneurship and innovation stimulating measures from an empirical and conceptual point of view. The final section summarizes the main findings and addresses how the identified potential conflicts of targets and interests can be avoided, or solved in the process of implementation.

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Per-Olof Bjuggren and Michel Elmoznino Laufer

This chapter investigates the importance of bank loans for the financing of startups and how location matters for expansion plans and financing. The two main questions posed are: what does the financing of Swedish corporate startups look like, and how does location matter for expansion plans and financing? To provide answers to these questions, both survey data and registry data have been used. The survey data are from a questionnaire sent out to startups listed in the files of the Swedish Jobs and Society Foundation. We looked at corporations founded during the period 2009–2013 that are family firms in terms of ownership structure. The survey indicated that bank loans are rare. Essentially, the entrepreneur personally takes most of the business risk. Combining registry data with the qualitative data from the survey, we used regression analysis to study differences due to location. The regression analysis showed that the degree of urbanization matters for plans for expansion. In the three most urbanized areas, the startup firms had plans to expand their business both at home and abroad. In the other urbanized areas, the focus was on expansion at home.