Abstract
This paper explores Italy’s biotech industry. This is the case of a new industry formation in a hostile institutional context. Our goal is two-fold. First, it is to extend our understanding of the role of institutions on firm formation and industry creation. Second, it is to offer prescriptive evidence for those regions that are trying to encourage entrepreneurship in innovative industries or increment existing systems of innovations. We adopt the interpretative lenses of the institutional theory. Our work aims to discuss the role that institutions (by the meaning of regulations, policies, and fiscal measures) provide to the development and change of industries around the world. We offer a comparison between Italy and other European countries in order to advise rules and suggestions to improve the competitiveness of the Italian biotech industry and firm formation. We recognize that the Italian institutional context is hostile to new industry creation because the rules and regulations do not support new firm formation. Moreover, Italy represents a context that shows a high level of risk aversion to radical innovation such as biotechnology.
Highlights
The analysis and development of innovative industry creation is central to current thinking about industrial change and economic development
In recent decades, new technologies have largely supported the development of new industries in geographically defined clusters, and this captures the interest of the nation as a vehicle for economic development and industrial change (Fritsch & Wyrwich, 2019)
We have investigated the case of the Italian biotech industry
Summary
The analysis and development of innovative industry creation is central to current thinking about industrial change and economic development. The seed-ground perspective considers the key role exerted by the national political institutional context It reflects that institutions are the major actors in the dynamic of industrial development and conceptualise the role of institutions in firm formation and innovation. It happens that institutions are wrongly equated with no market organisation (Reddy et al, 1991) and according to Geels (2004), there is a need to better conceptualise the role of institutions in firm formation and innovation In this direction, we consider that industry creation is an evolutionary process of variation in which the three main factors are: the seed (i.e. idea and the capacity to generate a new idea), the ground (i.e. the entrepreneurial environment in which we found availability of venture capital, supportive social capital, entrepreneurial expertise, support services, and research universities), and the grower (i.e. the Government enacting regulations, policies, and fiscal measures).
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