Understanding territorial innovations in European regions: Insights from radical and incremental innovative firms

Abstract

Innovation is widely considered to be a key driver of regional economic growth and resilience. Economic openness, research and development (R&D), public support, absorptive intensity, human capital and innovation cooperation are known to produce spill-over effects on regional innovations and growth. Several studies within individual European countries have shown different results from these activities. The same is true for firms' approaches to innovations (open versus closed or radical versus incremental innovation). Using the Community Innovation Survey datasets, we analysed 1,820 firms from ten European countries to assess the factors that significantly influence innovative outputs from the perspective of radical and incremental small and medium-sized enterprises (SMEs) and large firms. The results emphasize the significance of human capital intensity, suggesting that both incremental and radical innovative firms in these regions are effective in absorbing new knowledge that improves new product development. On the other hand, surprisingly, our results contradict previous assumptions about the importance of innovation cooperation and demonstrate the lack of significance in most of the collaboration activities, signifying some extent of unviability in R&D cooperation in both radical and incremental innovating SMEs and large firms. This study has theoretical and practical implications for regional innovation policies in these regions.