SPATIAL DISPERSION OF TECHNOLOGICAL INNOVATION: A CASE STUDY FOR THE NETHERLANDS BY MEANS OF PARTIAL LEAST SQUARES*

Abstract

ABSTRACT. In this paper the impact of spatial and nonspatial variables on the innovation potential and innovativeness of (small) industrial firms in The Netherlands will be analyzed. Innovation potential and innovativeness will be conceived as latent variables which will be measured by a partial least squares approach. The variables reflecting innovation potential are notably input variables such as internal and external R&D, while innovativeness will be based on output indicators such as the number of product and process innovations.The regional dimension enters our analysis essentially at two levels. First, we will investigate whether more innovative firms are to some extent spatially biased (i.e., on the basis of intrafirm characteristics). Secondly, we will analyze the relevance of an indigenous regional impact, per se. In other words, we will examine whether firms with an equal innovation capacity will differ in actual (i.e., realized) innovativeness as a consequence of different regional conditions.For the first issue, our results indicate that not all regions are equally well‐endowed with potentially innovative (small) firms. Our analysis even demonstrates that these firms are underrepresented in regions which are generally considered to offer the most favorable production environment. After compensating for these differences in the composition of the regional set of firms, we demonstrate that an indigenous regional impact per se cannot be identified in The Netherlands.