Regional entrepreneurship and innovation: historical roots and the impact on the growth of regions

Abstract

This paper proposes a conceptual framework in which a historical cultural environment based on scientific knowledge and creativity is an important driver of long-term regional entrepreneurship and innovation. These two factors, in turn, foster the growth of regions. This framework is empirically tested in Italy using current and historical data at the NUTS 3 geographical level and applying structural equation modeling to a system of three equations. The empirical evidence supports the conceptual framework and shows that the cultural environment has an indirect effect on regional growth through entrepreneurship and innovation. Historical scientific knowledge, proxied by the presence of universities, and past creativity, proxied by the presence of scientists and inventors in the area, positively affect long-term regional entrepreneurship and innovation. Regions with higher levels of entrepreneurship and innovation grow faster than other regions. Lastly, entrepreneurship plays a crucial role by also strengthening the positive impact of innovation on growth.