1.2.2 Innovation assets

Local assets are in the heart of regional innovation. Local assets might include R&D capacity (e.g. universities, research organizations, private inventors, etc.), human resources (e.g. talented people, skilled workforce, etc.), financial capital in support of entrepreneurship and innovation (e.g. innovation support funds, community programmes, venture capitalists, business angels, etc.), legal and regulatory environment, physical infrastructure, etc.
The following sections aim to describe each of the innovation assets that form the local innovation environment of a community or a region.

Human resources
Human resources are one of the most important that drives innovation process forward in local communities. At the same time the human factor is the most important element of the innovation potential in the company. The development and the successful implementation of innovation are mostly considered as a creative process. The so called human factor in the innovation process is constituted by the following elements – creative personality, creative environment, team work, system for creating and managing knowledge.1 On a larger scale when talking about human assets at regional level, local communities constantly strive to attract and retain innovation companies by investing in the skills and technical knowledge of the workforce. In addition skilled labour is considered as such an important asset that many communities have made it the central theme of their regional marketing efforts. At the heart of improving local skills and labour capacities lies the education and lifelong learning systems development. Economic developers must account for all three factors — available workforce, specialized or skilled workforce, and quality of educational institutions — when evaluating local assets for innovation.

Universities and research institutions as root of innovation and ideas
Universities are key pillars in every local innovation system.  Universities and research centres are considered as creators, receptors and very often interpreters of innovation and ideas. They are the most important source of human capital and resources. As the key component of social infrastructure they are considered as the key asset of regional innovation and essential to long-term economic growth. R&D investments at universities create opportunities for partnerships between education and industry that can significantly benefit all social economic actors in a certain local community and environment.

Topic for discussion in a small group
In many countries R&D development and commercialisation of innovation are hindered by the lack of close relations and cooperation between businesses and R&D communities. Very often, on one hand we have businesses innovating on themselves with relatively no help at all, and on the other hand we have universities and research institutions generating innovations and research projects which often never leave the academic community. If just a small percentage of those inventions are commercialized many local communities could improve their innovation potential which will provide the basis for growth and increase of employment.

Financial Capital for innovation
Innovation and entrepreneurship require access to capital in order to flourish in local environment. Transforming ideas into products and services requires significant resources. Very few companies, private researchers or even universities have the ability to finance the entire innovation development process. Some regions which are generally more technologically developed have little trouble retaining entrepreneurs and start-ups because of the significant presence of both risk investors and other financial institutions. On the contrary less developed and more isolated areas must seek different solutions with providing businesses with access to capital, such as forming public-private partnerships, local innovation funds, business angels, etc. Generally at local level finance may be available from number of sources, which are described in detailed in the relevant chapters of the innovation guide2.

Legal and Regulatory Environment
National and regional government authorities create the necessary legal and regulatory framework, develop the infrastructure, foster the financial sector to participate in the innovation process and facilitate the development of R&D and technology by forming development policies at both local and national levels. The importance of taxation and regulations can attract or deflect businesses from a certain region or community. Innovation is less likely to develop in areas with very heavy administrative burdens for SMEs and employment systems. The lack of incentives for investments and innovations is another barrier which will hinder the development of successful and sustainable local innovation system. In addition an inadequate regulatory environment is particularly unfriendly for small businesses. Nevertheless the European Union have taken into account the importance of innovation and R&D and have made them a top priority in all European policies.

Industrial base
In order to develop an effective economic development strategy it is necessary to take into account the industrial base of the region, including key business entities, main products and services, traditional business models, market advantages, etc. Regional potential is best served by first building and supporting the areas of traditional strength (eg. Industry, tourism, services, etc.).

Physical infrastructure
Physical infrastructure such as transportation and communication, telecommunication networks, public utilities, or access to natural resources are a key assets in achieving ks, public utilities, or access to natural resources are a key assets in achieving local environment which will be beneficial for innovation. 

You can discuss the topic of local innovation assets by answering the following questions in a small group of people

  1. What in your local environment helps you innovate? What hinders you from innovating?
  2. What outside your local environment helps you innovate?
  3. What is missing in your local environment that could help you innovate?
  4. Where and by whom could you specifically use help?

Necessary time for discussion in a group: Approximately 20-30 min.

 


1 Human factor in innovation process is described in the relevant sections of the guide
2 For more information on financing innovation at local level, please see component 8 “Financing Innovations” and the relevant sub-sections