101

ITA

LY

BALBONI, BERNARDO; BORTOLUZZI, GUIDO; COZZA, CLAUDIO; HARIRCHI, GOUYA; PUSTOVRH, ALEŠ*

DEAMS – University of Trieste* Faculty of Economics, University of Ljubljana

Chapter 6Italy

highlights

• The preponderance of small firms is a well-known characteristic of the Italian economy.

• One of the most important pillars of the economy is the production of high-quality products

such as in the machinery, textiles, industrial designs, alimentary and furniture sectors.

• Italy is performing well with regards to GDP per capita as compared to Regional and EU-

28 mean.

• With regards to the total number of new PhD graduates in the total share of the active

population, Italy stands slightly better than the EU-28, while only equal to the Regional mean.

• Consistent with the Adriatic Region as a whole, Italian SMEs show a relatively poor

level of internationalisation, with the dominant presence being on the national market,

followed by the presence in Western, Central and Eastern Europe.

• The level of received support through innovation incentives from the government,

Regional authorities and the EU is low for all measured forms of financing in both Italy

and the Adriatic Region as a whole. In most cases, financial support came from local or

Regional authorities.

• Regarding the micro determinants of innovation and knowledge hiding, in both Italy

(1,86) and the Adriatic Region (2,31) they do not occur often.

• Cultural intelligence is ranked almost equally high in both Italy (5,01) and the Adriatic

Region (4,54).

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6.1 general overview

Italy is a Member State of the EU. The peninsula has borders with France, Switzer-

land, Austria, Slovenia, San Marino and the Vatican City. It also has borders with the

Ligurian Sea in the northwest, the Tyrrhenian Sea in the west, the Adriatic Sea in

the east, the Ionian Sea on the southeast and the Mediterranean Sea in the south.

According to 2015 statistics, Italy has a population of 60,795,612 people (Italian Na-

tional Institute of Statistics ISTAT, 2015). Italy was the world’s ninth largest econ-

omy in 2012, in terms of nominal gross domestic product (GDP). It is a member of

many international bodies including the G8 and G20, and it is a member of the Euro-

pean Union (EU) (OECD, 2014a). Italy is a parliamentary democracy with a president

that is the head of the state and a prime minister who is appointed by the president,

which is confirmed by parliament.

Italy’s real GDP growth per capita has been weak over the last decade. It has also

experienced longstanding fiscal difficulties and, most recently, declining real in-

come levels. To emerge from recession, it has embarked on a wide-ranging strategy

to restore fiscal sustainability and improve long-term growth. However, the public

debt-to-GDP ratio is nearly 130% and Italy has made public debt reduction its top

fiscal priority. In line with the recommendations of the EU and the International

Monetary Fund (IMF), the OECD recommends that Italy pursue efforts to halt and

reverse the upward trend of the debt-to-GDP ratio and focus budget consolidation

on spending control (OECD, 2014a).

Italy has experienced a series of political changes in the last four years that have

impacted upon its institutions dedicated to developing cooperation. The centre-right

coalition government, led by Prime Minister Silvio Berlusconi since 2008, embarked

on reform of Italian public administration in 2010, which involved the Ministry of

Foreign Affairs (MFA). The Berlusconi government resigned in November 2011 and

a new government, led by Prime Minister Mario Monti, took office. Emergency aus-

terity measures were introduced in response to worsening economic conditions and

additional budget cuts were imposed throughout public administration. The Monti

government created the position of Minister of International Cooperation and Inte-

gration within the Prime Minister’s Office. This gave new impetus to developing co-

operation, as demonstrated at the widely attended forum on Italian development

cooperation in Milan in 2012. Following the February 2013 elections, a new coalition

government, led by Prime Minister Enrico Letta, was formed. Prime Minister Letta as-

signed the development cooperation portfolio to a Vice-Minister for Foreign Affairs.

A new government, led by Matteo Renzi, took office in February 2014 (OECD, 2014a).

The Italian economy is facing a number of important challenges. The first one

is economic stagnation. Prior to the 2008 financial crisis, the country was already

1036. ITALY

idling in low gear. In fact, Italy grew an average of 1,2% between 2001 and 2007

(Focus Economics, 2015). The global crisis had a deteriorating effect on the already

fragile Italian economy. In 2009, the economy suffered a hefty 5,5% contraction—

the strongest GDP drop in decades (Focus Economics, 2015).

Another important economic challenge is presented by unemployment. The

unemployment rate has increased constantly over the last seven years. In 2014, it

reached 12,7%, which is the highest level on record (Eurostat, 2015). The high unem-

ployment rate highlights the weaknesses of the Italian labour market. The incum-

bent government of Matteo Renzi has recently introduced a labour reform in order

to mitigate some of the inefficiencies in the labour market and labour relationships.

While the high rate of unemployment is a big challenge for Italy, there is also a lack

of efficient use of the country’s talent (World Economic Forum, 2014).

The difficult status of the country’s public finances represents another chal-

lenge. In 2013, Italy was the second biggest debtor in the Eurozone and the fifth

largest worldwide. In a bid to face the recession, the government passed two major

austerity packages in 2010 and 2011. While the first package was focused on a re-

duction of government spending in order to reduce the nation’s budget deficit and

public debt, the second introduced, among other measures, a series of tax increases

(Focus Economics, 2015).

6.1.1 overview of the economic situation in the country

The preponderance of small firms is a well-known characteristic of the Italian econ-

omy. Italy leads the EU in the number of enterprises and has the second largest

number of SMEs among European countries (Moncada-Paternò-Castello, P. & Gras-

sano, G., 2014). Italy is regarded as an innovation driven economy, it ranks 49th in

the overall Global Competitiveness Index 2014–2015 (World Economic Forum, 2014),

which is slightly below other southern or central European countries such as Spain,

Portugal, Poland or Czech Republic and far less than the northern European coun-

tries that are situated in the top 10 of the index. The Innovation Union Scoreboard

regards Italy as a “moderate innovator” highlighting that Italy has been increasing

its innovation performance, relative to the EU, up until 2012, with a peak of 82%,

after which it declined to 79% in 2014 (IUS, 2015). According to the IUS, growth has

been strong in the dimension of open, excellent and attractive research systems

(9,5%) due to performance improvements in Non-EU doctorate students (19%)

and international scientific co-publications (7,2%). Performance has also increased

strongly in licensing and patent revenues from abroad (18%). A strong performance

decline is observed in venture capital investments (-13%) (IUS, 2015).

104

One of the most important pillars of the economy is the production of high-qual-

ity products such as in the machinery, textiles, industrial designs, alimentary and

furniture sectors. These products contribute substantially to the country’s exports.

Italy’s trade volumes increased significantly after the country joined the Eurozone.

Despite growing global competition, since 2010, Italian exports have been steady

rising. In 2014, they reached EUR 398 billion, up 2% from the previous year, boosted

by increases in sales to the European Union (+3,7 %) and the United States (+10,2

%). The expected export growth rate for 2015 is above 5%. These results come from

an inhomogeneous distributed economic system. In fact, the country is divided into

a highly-industrialised and developed northern part, where approximately 75% of

the nation’s wealth is produced, and a less-developed southern part. This divide is

one of the result of the of the post-war economic miracle, during which the develop-

ment of small- and medium-sized companies in export-related industries generat-

ed several industrial clusters that were mainly localised in the north of Italy (Focus

Economics, 2015).

The evolution of the research and innovation (R&I) system in Italy has been

heavily affected by the economic crisis, the reduction in public expenditure associ-

ated with austerity programmes and the fall of private R&D and investment efforts.

Italy’s GDP has fallen in 2012 (-2,8%) and in 2013 (-1,7%) (Eurostat, 2015; Nascia, L.

& Pianta, M., 2015). Real GDP contracted by 0,4% in 2014, with a stabilisation in the

final quarter of the year (EU Commission, 2014). In fact, 2015 remains marginally

negative. However, supported by positive external factors, Italy’s economy is ex-

pected to strengthen in 2016 (EU Commission, 2014).

The decrease in R&D efforts is also linked to the limited internationalisation

of Italian technological activities; Italy ranks low in the attraction of foreign firms’

R&D investment, and even more so in the internationalisation of its business R&D,

which it has done for a long time . A recent study (Cozza, C. & Zanfei, A., 2014) shows

that foreign owned multinationals are the most active in cross-border transactions

of knowledge, but they hold a low and decreasing share in national R&D expen-

diture. This trend reveals, on the one hand, that the Italian economy is a poorer

and poorer attractor of high value added investments from abroad; and, on the

other hand, that national companies, and particularly local SMEs not belonging to

international groups, have significantly increased their R&D efforts over the past

decade. The authors also find that, although outward expenditures of Italian com-

panies increased substantially, R&D performed abroad remains a minor compo-

nent of business research activities and is due to a small number of firms investing

in a few destination countries.

1056. ITALY

6.1.2 overview of the research and innovation actors and activities in the country1

As highlighted in the Erawatch- Italy country profile (Erawatch, 2014), the gover-

nance structure of Italy’s R&I system maintains a top role of the Council of Min-

istries which defines priorities and outlines policies in the National Research Pro-

gramme (PNR), which is the main government document for R&D planning. The

research policy development in Italy is based on large multi-annual plans (DEFs)

that are enacted through annual budget cycles established by the Financial Law

(public budget) of the State. DEF includes also the National Programme of Reform

PNR, relevant for the monitoring of the impact political agenda on the R&I sys-

tem. The resources to implement public policies are chiefly distributed through the

State’s annual financial law approved by the Parliament every December and the

DEF (economic and financial policy document of the Government).

The main actors in the R&I system as highlighted are as follows:

• The Ministry for education, research and universities (MIUR) is the main player in

R&I, in charge of coordinating national and international scientific activities, su-

pervising the academic system, funding universities and research agencies, and

supporting public and private research and technological development. MIUR co-

ordinates the preparation of the three year National Research Programme (PNR)

in consultation with other Ministries, Regions and other stakeholders. The stra-

tegic lines and priorities for the Italian national research system are mainly set

by MIUR. They are outlined in the PNR National Research Programme 2011-2013

and in Horizon Italia 2020, HIT2020. HIT2020, released by MIUR during March

2013, enlightens the multiannual (2014-2020) research and innovation strategy

in Italy within the EU framework. 

• The Inter Ministry Committee for Economic Planning (CIPE) has the role of coordi-

nating science and technology policy – focusing on medium and long term actions.

• The Ministry for economic development (MISE, previously Ministry for Produc-

tion Activities) manages industrial innovation. The Department for Competitive-

ness within MISE is in charge of technological innovation and responsible for

industrial policy, industrial districts, energy policies, policies for SMEs, and in-

struments to support the production system. The Department of development

and social cohesion (DPS) within MISE is in charge of the planning, coordination

and management and the structural funds 

1 The information in this section is based on the data retrieved in September 2015 from the Italian country profile under Erawatch (Erawatch, 2014).

106

• The National Agency for the Evaluation of Universities and Research Institutes

(ANVUR) is the institution in charge of the evaluation of HEIs and PROs and it

regularly provides criteria for the institutional funds allocation.

• The National Research Council (CNR) is the largest public research organisation

(PRO) under the supervision of MIUR. The National Agency for New Technolo-

gies, Energy and Sustainable Development (ENEA) has the mission to develop

R&D on energy and environmental fields.

• The Digital Italy Agency (AgID), established in 2012 but not yet fully operational,

is in charge of the Italian Digital Agenda (IDA) under the control of the Prime

Minister’s office.

• Other Ministries (Health, Agriculture, Defence, etc) manage research funds in

their specific fields. Regions, under the concurrency principle, develop local ini-

tiatives in R&I and contribute to policy making on R&D; in some cases, research

organisations are funded and managed by Regions.

Overall, the structure of the research system in Italy can be seen in three levels:

POLITICAL LEVEL

The Parliament and the Council of Ministries is the most important political level

for R&D policies.

The coordination of Science and Technology policy within the government is under

the responsibility of Ministry Committee for the Economic Planning CIPE especially

for medium long term actions. The CIPE role became more effective after a special

section “Sessione Ricerca” dedicated to research and education was created during

the last decade. The CIPE also reviews the so-called Document Economic and Fi-

nancial (DEF), including the National Reform Programme and release the three-year

PNR under proposal of MIUR.

OPERATIONAL LEVEL

In Italy the Ministry for Education University and Research (MIUR) coordinates na-

tional and international scientific activities, distributes funding to universities and

research agencies, and establishes the means for supporting public and private re-

search and technological development (RTD) funding. Since 2007 MIUR has been

included in the Inter-ministerial Committee for Economic Planning (CIPE).

The Ministry for Economic Development (previously called Ministry for Production

Activities) supports and manages industrial innovation. Other Ministries (Health,

Agriculture, etc) manage research funding in their specific fields.

Important bodies dealing with advisory tasks are the CUN National Committee for

the University, which is in charge of proposal and consultancy on the academic cur-

1076. ITALY

ricula and recruitment; the CNVSU and the CIVR respectively in charge of the eval-

uation of the University system and of the research system, now replaced by the

ANVUR, the National Agency for the Evaluation of the University and the Research.

PERFORMER LEVEL

Public research is based on Universities and Public research organisations. In 2013,

95 universities were active, of which 67 are public institutions and 11 are telematic

based. The National Research Council (CNR) is the largest public research organisa-

tion (PRO) under the supervision of MIUR. The National Agency for New Technolo-

gies, Energy and Sustainable Development (ENEA) has the mission to develop R&D

on energy and environmental fields. 

In the private sector Fiat (automotive), Finmeccanica (aerospace and military), Tele-

com Italia (telecommunications), Unicredit and Intesa San Paolo (banking) are the

most relevant R&D players, included in the top 100 EU companies ranked by R&D.

Figure 6.1 – The structure of the Italian R&D system

Source: Erawatch, 2014

108

The economic depression and austerity policies cutting public expenditure have

been a major constraint on public and private R&D and innovation efforts. Consid-

ering Research and Development (R&D) efforts, in 2012 GERD recorded an increase

over 2011 of 1,9% in real terms, but provisional data for 2013 show a fall of 2,9%

(about €300m) over 2012. The R&D intensity national target – R&D expenditure

equal to 1,53% of GDP – is still far away and the gap with the EU-28 average is per-

sisting. In 2011 the R&D to GDP ratio was 1,21% as opposed to a EU-28 average of

1,97%. In 2013 the R&D to GDP ratio was 1,25%, as opposed to a EU-28 average of

2,02. In 2013 Italy’s total R&D personnel (in full time equivalent units) amounted

to 252,648, of which 117,973 researchers. In 2013 Italy’s share of R&D personnel on

total employment was 1,13%, as opposed to a EU-28 average of 1,25%; the share of

researchers was 0,53% as opposed to 0,79% in the EU-28 average. Expenditure for

universities accounts for 1% of Italy’s GDP, as opposed to 1,5% in the EU average

(Nascia, L. & Pianta, M., 2015).

The structure of expenditure for R&D in Italy shows about a quarter of funds

going to upstream basic research, half going to applied research and a quarter going

to experimental development (Nascia, L. & Pianta, M., 2015).

6.1.3 recent changes in r&d and innovation system in the country

R&I policy has shown a broad continuity, but there have been some effects brought

about by the two changes of government in May 2013 (Letta government) and Feb-

ruary 2014 (Renzi government). The new ‘Programma Nazionale per la Ricerca 2014-

2020’ was drafted in February 2014; however, with the new government, it has not

yet obtained the required approval from Inter-ministerial Committee for Economic

Programming (CIPE). Despite a growing share of distributed R&I, either to univer-

sities, PROs or private firms, on the basis of performances or specific projects, the

general reduction of resources is offsetting the expected benefits from improved al-

location efficiency. Public support to firms’ R&D has been provided, on the one hand,

through tax credits, with measures that have been characterised, however, by fre-

quent changes. On the other hand, the government has provided direct incentives to

firms through a variety of funds, including the “Fondo delle agevolazioni alla ricerca”

for industrial R&D, MISE’s “Fondo per la Crescita Sostenibile” fund and the PONREC

plan for cohesion projects, but these have limited resources. No funds were available

for the research programmes of PRIN or FIRB –mainly oriented towards universities

and PROs, and no calls have been launched in 2014 (Nascia, L. & Pianta, M., 2015).

To improve public research performance, a reform of funding mechanisms for

and management of universities was approved by Parliament in 2010 and is being

1096. ITALY

implemented, as is the reform of PROs under MIUR, launched in 2009. In 2013,

MIUR allocated new resources under the Cohesion Action Plan (CAP) to strength-

en public research infrastructures, particularly in the country’s southern regions

(OECD, 2014b).

In 2014, the results of the first ‘Abilitazione Scientifica Nazionale’ (ASN), a na-

tional ‘Qualification’ system for scholars who want to become candidates for po-

sitions of Full and Associate Professor, were published and the second round was

carried out, with full results that came out in 2015 (Nascia, L. & Pianta, M., 2015).

Currently, the ASN is in the process of being modified; candidates to positions of

Full and Associate Professor will be able to ask for the qualification at any time

during the year, with evaluating committees that will change every two years.

Business innovation performance varies across the regions and much R&D and

innovation capacity is concentrated in Italy’s northern and central regions. In 2012,

MIUR launched a national call for the creation and strengthening of technological

clusters. A project to support regional governments in designing and implementing

their smart specialisation strategies was launched in 2013 (OECD, 2014b).

Over 2012-14, Italy has reinforced its network of bilateral agreements for scien-

tific and technological cooperation with partner countries, in particular with Swe-

den, renewed for the period 2014-16. Since 2013, the Italian Trade Promotion Agency

(ICE), which replaced the former Institute for Foreign Trade, supports the interna-

tionalisation of Italian firms. Strengthening the internationalisation of Italian uni-

versities, PROs and businesses is also an aim of Destination Italy (OECD, 2014b).

Also, in terms of communication of research and innovation activities, strong im-

provements have been made in recent years, starting with the portal ResearchItaly2.

New regulations to support the creation and the development of innovative new

ventures were converted into law by Parliament on 13 December 2012. The regula-

tions draw on the report “Restart, Italia!3”, elaborated by the task force of the Italian

Minister of Economic Development made up of entrepreneurs, venture capitalists,

academics, journalists and civil servants. The new legislations, together with fur-

ther measures, introduce a new definition of ‘start-up’ and ‘certified incubator’;

establish an online directory for start-ups and incubators; support their access to

credit, through a public guarantee fund (Fondo Centrale di Garanzia), and to equity

market, through the establishment of a specific regulation of equity crowdfunding;

and introduce tax incentives and credits deriving from tax returns.

2 https://www.researchitaly.it/en/understanding.

3 http://www.sviluppoeconomico.gov.it/images/stories/documenti/startup_eng_rev.pdf.

110

6.2 macro-level analysis of innovation enablers and inhibitors

In this section, the most relevant macro-indicators of innovation in the country

are presented4. These indicators concern six categories of the national innovation

system: the economic situation of the country, figures regarding human resourc-

es as well as the education system, the innovation investments made by both

the public and private sectors and the scientific output. The indicators are syn-

thetically represented in Figure 6.2 and described after that. In the figure, 100

represents the EU average, while the dotted part of the histograms shows the

Adriatic Region average.

Figure 6.2 – Italian Innovation System, selected indicators

The economic data include the general economic figures of the country, such as

GDP per capita, total exports, unemployment rate, current account deficit, etc.

In the analysis for Italy we have included GDP per capita and compared it to the

Adriatic Region mean, as well as the EU-28 mean.

The Italian GDP per capita places the country significantly above the average

of the Adriatic Region and slightly over the average of the EU-28. However, it is

4 A more detailed picture about the country’s innovation profile can be found at:http://www.adriaticinnovationmap.eu/country-profile/.

1116. ITALY

also true that the Region itself is also positioned lower than the EU-28 average GDP

per capita.

The human factor plays a critical role in innovation, as the competitive advantage

built on human resources is not easily imitable. In order to assess and compare hu-

man resources in Italy with the Regional average and EU 20 average, we have includ-

ed the total number of new PhD graduates (as a percentage of the active population)

in the analysis. With regards to the total number of new PhD graduates, Italy stands

equal to the regional mean, while slightly lower than the EU-28 mean.

Education plays a central role in building the country’s innovation capacity. The indi-

cator of educational capabilities that was taken into account in this dimension was

the total number of students. The total number of students in Italy is below the

Regional mean and the EU-28 mean, which may be interpreted in a positive way, as

a possible enabler of innovation activities and growth of future knowledge sector

participants.

The public sector is a part of the economy that consists of state-owned institutions,

including nationalised industries and services provided by local authorities. The com-

mitment of the public sector to the generation of new ideas is measured with gov-

ernment expenditure on R&D.

In Italy, government expenditure on R&D, relative to the GDP, is below both the

Regional mean and the EU-28 mean.

The private sector represents an engine of economic growth and job creation, as

commercial enterprises constantly incorporate new technologies in their business,

due to market pressures and an imperative to stay competitive. To measure this, we

have used Business expenditure on R&D in the country, where Italy lags behind the

EU-28 countries.

The scientific output of a country is closely related to its innovation capacity; at the

same time, it can be used as an indicator of a country’s innovation performance. To

measure this, the number of SCImago scientific journal articles (per million active

population) has been used.

Number of SCImago scientific journal articles is, in relative terms, higher for Italy

than the Regional mean, yet below the EU-28 average value.

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6.3 meso-level analysis of innovation enablers and inhibitors

The survey of innovative micro, small and medium companies in Italy included en-

terprises within the Italian Adriatic Region and particularly from the Veneto, Friuli

Venezia Giulia, Marche and Emilia-Romagna regions, which are part of the IPA Adri-

atic eligible area.

Accordingly with EU recommendation 2003/361, only those enterprises that

employed fewer than 250 persons, and which had an annual turnover above EUR 1

million but not exceeding EUR 50 million, were considered. Since the interest was in

innovative firms, rather than high-tech industries, low, medium/low, and medium/

high-tech industries were also considered. The starting population generated on the

basis of the Aida Bureau van Dijk database allowed us to identify a sample of 16,686

SMEs located in the eligible area.

Overall, a stratified sample of 5,475 Italian companies (in terms of industries,

sales volume, and regional location) was contacted by phone and or by email to

participate in the study. We used the questionnaire technique to collect data, ad-

ministered through CATI and CAWI interviews conducted in the period between Oc-

tober and December 2014. Five hundred and fifteen questionnaires were received, of

which 434 had completed the questionnaire.

The average turnover of the firms in the sample was above EUR 8 million and

the average number of employees was 45. The ratio of foreign sales to total sales

averaged 27%. In line with the stratification strategy, the composition of the sam-

ple showed a wide scope in terms of industries covered. Firms from manufacturing

industries represented more than 75% of the sample, while service firms represent-

ed around 25%. Mechanical engineering (machinery and equipment and metal prod-

ucts) was the most represented industry, accounting for more than the 27% of the

total of the firms. The average sales and exports in terms of the total sales ratio

increased in the period from 2010–2013. Most enterprises mainly employed a ma-

jority of lower qualified workers (including secondary school education), followed by

employees with a college education and 14% with a master’s degree.

During the research process no methodological difficulties were encountered.

The researchers engaged an external expert company for data collection, which en-

sured an adequate response rate. This was particularly important considering the

extensive length of the questionnaire.

1136. ITALY

6.3.1 organizational innovation

The analysis of collected data on different aspects of organizational innovation

points to no major differences between Italy and the Adriatic Region average. “Re-

newal of internal rules and procedures” and “changes in the employees’ tasks”

holds the highest ranking in Italy, where both reached almost 5 points on the scale

from 1 to 7. The biggest disparities in favour of the Adriatic Region can be seen in

the changes in “update of compensation policies”, which have the lowest ranking in

both Italy and the Adriatic Region as a whole.

Chart 6.1 – Organizational innovation (Italy in comparison to the Adriatic Region average)

4,45

4,78

4,07

4,60 4,53

4,27 4,09

4,65

3,83

5,22

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114

6.3.2 internationalization level as innovation enabler

In the period from 2011-2013, less than half of the surveyed companies in Italy (30%)

were present only on the domestic market, where the majority of turnover was also

earned. Companies that exported their products were mostly present in Western

and Central Europe, considerably less so in Eastern Europe, and only to some extent

in North America, East Asia, South and Central America, the Middle East and North

Africa. Companies that were export-oriented were exporting to up to five countries

(40,7%) and very few companies (29,7%) were exporting to more than five markets.

Chart 6.2 – Geographic markets where enterprises sold goods and/or services during 2011, 2012 and 2013 (Italy in comparison to the Adriatic Region average)

4,45

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4,45

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As demonstrated, the national markets are the most represented areas in both Italy

and the Adriatic Region as a whole; in Italy, 97% of the respondents were present

on the domestic market (meaning that 3% of firms were exporters only), while for

the Adriatic Region as a whole this rate amounts to 95%. In the Adriatic Region, the

1156. ITALY

next most prevalent markets where companies sold their goods and services were

in Western, Central and Eastern Europe, as well as the Adriatic Region countries.

However, while Italy has a higher than average presence in all markets, interestingly

enough this is not the case in Adriatic countries. Discrepancies exist between Italy

and the Adriatic Region’s average in the markets, by which Italy lags behind the

Region’s average by 12%.

6.3.3 innovation incentives as innovation enablers

The majority of innovating companies in Italy within the three-year period of 2011-

2013 did not receive any kind of public financial support for innovative activities.

However, although at rather a small rate, in most cases the financial support came

from local or Regional authorities (22%), and less so from the European Union

(7,6%). This fact again confirms that the significant factor preventing innovative

activities is the lack of financial support.

Chart 6.3 – Public financial support (%) for the innovation activities in enterprises during the 2011, 2012 and 2013 coming from the government (Italy in comparison to the Adriatic Region average)

4,45

4,78

4,07

4,60 4,53

4,27 4,09

4,65

3,83

5,22

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4,84

4,31 4,13

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116

It is evident that the level of received support was low for all three forms of financ-

ing and in both, Italy and the Region as a whole. However local and regional author-

ities have played a stronger role in providing financial sources, as compared to the

Adriatic average.

6.4 micro foundations of innovation

Two innovative companies participated from Italy. The first company is a mechani-

cal manufacturer having a turnover of 27,5 Mil. Euro (2013 data; source Bureau Van

Dijk) selling in multiple markets. The second company is a producer of awnings that

is fast growing as well as fast expanding in foreign markets. At the end of 2013 the

company had a turnover of 19,1 Mil. Euro.

Chart 6.4 – Micro-determinants of innovation in Italy and the Adriatic Region

4,45

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4,60 4,53

4,27 4,09

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1176. ITALY

Regarding the demographic characteristics of the sample, the gender structure in

the analysed Italian companies was rather misbalanced, with the ratio of men to

women being 64% and 36%, respectively The average employee age was 39,2, with

youngest being 20 years old and oldest 60 years old. The majority of employees

held a High School diploma (48,2%), which was amongst the highest in the Region,

followed by a Master’s degree diploma (Laurea) (44,3%).

The graph presents the average descriptive results for Italy in comparison with

the Adriatic Region Here, it is important to take into account certain cross-coun-

try interpretation limitations, since the provided answers could be culturally con-

ditioned, due to the fact that the questions in the survey mostly deal with percep-

tions. In the case of Italy, factors that could have influenced the results were also

related to the companies’ specific settings. The Italian companies that participated

in the study belonged to the mechanical and outdoor furniture industries. The ob-

tained results could have been significantly different if companies from some other

innovative sectors had been recruited for the study.

Specific behaviours such as knowledge hiding and employee silence have strong

impacts on individual-level innovativeness. The data show that knowledge hiding

in both Italy (1,86) and the Adriatic Region (2,31) does not occur often. Interestingly,

the econometric data analysis on the Adriatic Region level has shown a slightly pos-

itive correlation between knowledge hiding and individual innovativeness, which is

contradictory to the previous empirical studies that claim that knowledge hiding

negatively affects innovativeness.

The construct employee silence is significantly negatively related to innova-

tiveness in our research at the Adriatic level. This is connected to the fact that the

employees do not share their ideas openly and if they feel fear, this holds back their

innovativeness. However, this construct was ranked rather low in both Italy (2,10)

and the Adriatic Region (2,71), therefore, it may be interpreted that employees do

not show substantial proclivity to silent behaviour.

According to the results of the analysis, on the level of the Adriatic Region, cul-

tural intelligence is significantly correlated with individual-level innovativeness,

which means that the more culturally conscious the employees are, and the more

knowledgeable they are about different languages, cultural values, etc., the more

innovative they are likely to be. This determinant is ranked almost equally highly in

both Italy (5,01) and Adriatic Region (4,54).

Perceived time pressure, according to the research, does not have any signifi-

cant correlation with the level of innovativeness in the surveyed companies of the

Adriatic Region. This determinant is ranked almost equally in both Italy (4,29), and

Adriatic Region (4,12).

118

Idea championing and individual innovation are also ranked equally high, Italy

(5,19) and Adriatic Region (4,66). As already pointed out, according to this study, the

gender and age of employees are strongly related to innovativeness at the Adriat-

ic Region level. Therefore, there are certain differences between male and female

employees, as well as younger and older employees, in terms of the level of their

innovativeness and the process of individual innovation emergence.

Task conflict, as a measure of disagreement between group members, is not

present to a large extent, in either the Adriatic Region as a whole(3,24), or in the

case of the Italian study respondents (3,31). Since in some empirical studies task

conflict has been identified as a potential innovation inhibitor, the low representa-

tion of this determinant may be interpreted in a positive way.

The concept of flow at work has three dimensions: absorption, work enjoyment

and intrinsic work motivation. None of these constructs has a direct significant link

with the individual-level innovativeness for the surveyed firms in the Region.

Regarding time perspectives, this research has shown that on the level of the

Adriatic Region, only past positive and present hedonistic time perspectives sig-

nificantly correlate with innovativeness. Past positive time perspective is negatively

correlated with innovativeness at the Adriatic level, while present hedonistic time

perspective is marginally positive correlated to innovativeness. In contrast, past

negative and future time perspectives did not show any significant correlation. For

Italy, past positive time perspective is (4,24) slightly higher than that of the Adriatic

Region (3,62). Present hedonistic time perspective is ranked very high in the case of

Italy (5,51), in comparison with the Adriatic Region (3,52).

According to the conducted data analysis, time management is highly correlat-

ed with innovativeness and it is one of the largest determinants of individual-level

innovativeness at the Adriatic level. This determinant is ranked equally high in Italy

(5,61) and the Adriatic Region (5,1).

Entrepreneurial and intrapreneurial intentions are shown to be significantly re-

lated with employees’ innovativeness on the Region level, which implies that entre-

preneurial skills may be of potential benefit for the company, as they stimulate the

innovation processes. This determinant is mid-ranked and it does not differ much

between Italy (3,87) and the Adriatic Region (4,03).

Self-efficacy, reflecting an optimistic belief in oneself that creates an impulse

to perform new or difficult tasks, has the strongest impact on individual-level in-

novativeness in the surveyed companies of the Adriatic Region. In fact, the ranking

between Italy (4,92) and the Adriatic Region (5,12) is rather equal, highlighting a

comparable relationship also in the case of Italy.

In this research, national culture, measured by individualism and uncertainty

avoidance constructs, also does not seems to play a significant role in explain-

1196. ITALY

ing the individual-level innovativeness in the surveyed companies of the Adriatic

Region.

However, uncertainty avoidance holds rather high and equal rank in both Italy

(5,60) and the Adriatic Region (5,43), which implies some specific cultural character-

istics of risk aversion in the Region. Individualism, as another construct, is ranked

lower in Italy (3,61) than in the Adriatic Region (4,48).

6.5 conclusions

In the past couple of decades, Italy has been experiencing slow growth or outright

recession, the demise of many of its industrial districts and persistent political is-

sues. This has resulted in a need to change its whole socio-economic system. Its

innovation system holds the promise to facilitate this change, but it is currently not

delivering the transformation of its economy into innovation-driven development;

in fact, its innovation results put Italy below the EU average.

Yet, Italy still remains an economic powerhouse and the world’s ninth largest

economy. With several highly competitive industries and soaring exports, several

globally competitive multinational companies and thriving SMEs, it still has the po-

tential to transform its economy. Furthermore, in the Adriatic , it is the ‘elephant in

the room’ with its huge market and developed innovation system that the whole re-

gion could benefit from. This represents an opportunities for Italy and for the region.

In order to transform its economy and create more jobs, more investments into

innovation will be required as Italy is investing less than its EU peers – 1,29 % of its

GDP compared to 2,03 % in the EU. Its share of R&D in the GDP is even below its

own target of 1,53 %. Understandably, the majority of companies in our research

had received no public financial support for innovation. Thus, more effective and

targeted distribution of the funds that are available is needed, as it seems that

even the funds it does invest are yielding smaller results that they could. Examples

such as Luxembourg and Malta show that even a small amount of R&D expenditure

(similar to Italy) can yield significantly higher results. Macro-economic stability will,

thus, be crucial to increase the amount of R&D spending, but the innovation sys-

tem governance will need to improve in order to increase the efficiency of the funds

that are available. If Italy could achieve this, it would also be able to influence and

assist other, smaller economies in the Adriatic Region to improve their innovation

systems as well. Most of these smaller economies face even more limited resources,

combined with national innovation systems that are not connected with each other.

Italy could (and should) influence the whole Adriatic Region to facilitate the devel-

120

opment of the regional innovation system. This would not only leverage its own

system, but also help open it. With its great diversity, geographical proximity and

similar culture (including the widespread understanding of the Italian language), it

could act as a test region for Italian companies and their and internationalisation

strategies. They could facilitate their learning on how to expand their innovative

solutions to other, broader markets in the future.

Unfortunately, Italian companies do not seem to cooperate within the Region.

While Italy has a higher than average orientation towards all export markets, Italian

companies are less open to internationalisation in the Adriatic countries, with Italy

lagging behind the Region’s average by 12%. Changes on this meso-level of the Ital-

ian innovation system would, thus, also require the promotion of the opportunities

that regional innovation systems offers for their growth and innovation strategies.

Finally, the policy measures that would help establish a regional innovation sys-

tem cannot only target the macroeconomic environment and meso-level measures,

but will also aim to change the nature of innovation activities within companies.

Italian companies share high uncertainty avoidance with other companies in the

Region and remain fairly closed to new, innovative solutions and ideas. Their pro-

clivity to innovate could be enhanced by targeting micro-level changes within the

companies that would encourage more risk-taking and openness to novelties and

innovation. Perhaps systematic collaboration with similar companies from other

nearby countries would enable the removal of this risk avoidance and embrace more

open and risk-taking attitudes. Policy-measures aiming to establish transnation-

al and cross-border collaboration in innovation activities would have a chance to

create a truly regional innovation system and help transform the companies in the

whole Region, including Italy.

In order to facilitate the establishment of a regional innovation system, interna-

tional cooperation in policy-measure development, with the aim of creating a sin-

gle regional policy-making environment and, thus, cross-border innovation flows, is

needed. We would even suggest establishing some transnational support institu-

tions with their own financial capabilities to implement regional innovation policy

measures (perhaps cross-border innovation vouchers or the regional measures sim-

ilar to an H2020 SME instrument). This would, of course, require close cooperation

of policy-makers in very diverse countries, but the PACINNO project is evidence that

this can be achieved.

1216. ITALY

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