Regional Differences and Determinants of Entrepreneurial Innovation - Empirical Results from an Austrian Case Study

Increasing international competition has forced manufacturing enterprises in industrialised countries to restructure and to improve their competitive position. An important strategy is to introduce new or modified products and/ or processes. There is both theoretical reasoning as well as some evidence that regional economies differ in their ability and propensity to innovate. The paper discusses first theoretical approaches and explanatory factors for regional innovation. Then some empirical evidence with regard to the innovation acitivity of plants (introduction of new products and processes) in selected Austrian regions is presented, mainly based on interviews in about 150 plants. The sectors analysed are metalworking, machinery, electrical products and electronics. The investigated regions are the capital region of Vienna, two industrialised regions (one of them an "old" industrialised region) and two peripheral rural regions. The analysis shows that there are considerable regional differences with regard to the introduction of product-innovations classified as "new to the market" as well as to some of the new processes (e.g. the more recent technologies such as CAD). In general a higher innovation activity could be observed in the agglomeration of Vienna as well as the "younger" industrialised region of Vocklabruck. Innovation activities were rather low in the old industrial Obersteiermark and the peripheral rural Waldviertel. In the PROBIT-analysis it was found that the innovation activity of the plants was to a high degree determined by their structural and behavioural features: There were significant internal factors such as the functions performed (R&D and marketing), the qualification of the labor force and the kind of production process (length of production runs). There were also external factors such as the export orientation, the competitive position and the technical economic contacts. Locational factors had some but not much direct influence on the innovation activities of plants. The regional innovation differences thus were to a high degree due to the historically evolved regional economic specialization. The results therefore suggest that regional innovation policy should be integrated with the long run structural improvement of regional economies.Series: IIR-Discussion Paper