The aim of the present study is to examine the relationship between firms propensity to innovate and socio-institutional factors at local level. Social capital, institutional activity and accumulation of experiences of collective action among firms influence both process and product innovation performance. Ceteris paribus, innovative firms are more likely to succeed where the endowment of social capital is high (and social and economic crime are minimal), the fabric of social relations is extended, the intermediate governments play an active role and tradition of cooperation between firms is particularly rich.
Keywords: Firm innovation, social capital, local governments
Jel Code: L60, Z13, O3