101 ITALY BALBONI, BERNARDO; BORTOLUZZI, GUIDO; COZZA, CLAUDIO; HARIRCHI, GOUYA; PUSTOVRH, ALEŠ * DEAMS – University of Trieste * Faculty of Economics, University of Ljubljana Chapter 6 Italy 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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6.2 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.
112
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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4,84
4,31 4,13
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4,01
4,62
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Albania
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Italy
4,45
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4,07
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4,27 4,09
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Albania
Adriatic region Adriatic Region
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
4,78
4,07
4,60 4,53
4,27 4,09
4,65
3,83
5,22
4,29
4,84
4,31 4,13
3,80 4,13
4,01
4,62
4,05
4,70
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Organiz
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Albania
Adriatic region
Italy
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
3,80 4,13
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Organiz
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Develo
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Albania
Adriatic region Adriatic Region
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
4,29
4,84
4,31 4,13
3,80 4,13
4,01
4,62
4,05
4,70
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Organiz
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Renew
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Albania
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Italy
4,45
4,78
4,07
4,60 4,53
4,27 4,09
4,65
3,83
5,22
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Adriatic region Adriatic Region
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
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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Organiz
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4,45
4,78
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4,27 4,09
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Albania
Adriatic region Adriatic Region
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-
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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
1. Cozza, C., Zanfei, A. (2014). The cross border R&D activity of italian business
firms. Economia e politica industriale, 41(3), 39-64.
2. Erawatch. (2014). Erawatch: Italy country profile. Retrieved 07/09/2015, from