1.2.3 Main actors in the innovation process at local and regional level

The main factors involved in the innovation process at local level are determined by the innovation assets present at the respective community or region. In general the presence of the three basic assets R&D – industry – finance is crucial for the development of a local innovation system. Ultimately a dynamic environment for innovation and entrepreneurship is in place when the main innovation assets of a region are turned into results, such as productivity, prosperity and growth.
The basic structure of the participants in the local innovation environment is constituted by companies, universities and research centres, local authorities and intermediary organizations. The interaction between the main innovation actors in a respective region creates the Local Innovation Systems.

The general definition of Local innovation system is described as: a spatial concentration of firms (including specialized suppliers of equipment and services and customers) and associated non-market institutions, listed in Figure 2 below, that combine to create new products and/or services in specific lines of business.1

  Fig. 2: The pyramid of the Local Innovation System

Local innovation actors must be linked with local assets in order to support regional innovation. Very often, however innovative ideas, people and innovation actors remain isolated. Many ideas for innovative products or services generated by the universities and research institutions remain out of reach for businesses. In addition many entrepreneurs never reach the commercialization stage of an innovative idea due to lack of the appropriate expert assistance or financing.
The following sections aim to describe the most important actors that form the local innovation environment of a community or a region.

Micro companies, start-ups, entrepreneurs, spin-offs etc.

Family owned micro companies
Family businesses are businesses mainly operated by families or by persons in significant personal relationships. Despite the importance of family businesses they are very often discarded as factors in local business environment. However according to various surveys and expert analysis at local level, family firms and their positive degree of entrepreneurship directly affect the development of the regions. Although many small and micro businesses are family-owned and operated, there is evidence that family firms are also fast growth firms and very large successful firms. The connection between entrepreneurship and family business is widely unrecognized. Families are vital and supportive environments for entrepreneurial behaviour. Researchers estimate that more than the 90% of the businesses in a community are family owned and controlled. This means that larger part of companies with innovative potential in local communities is family owned – micro companies.

A start-up company or “start-up” is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. Start-up companies can come in all forms, including those that are simply life-style companies, but the phrase "start-up company" is often associated with high growth, technology oriented companies. Investors are generally most attracted to those new companies distinguished by their risk/reward profile and scalability. That is, they have lower bootstrapping costs, higher risk, and higher potential return on investment. Successful start-ups are typically more scalable than an established business, in the sense that they can potentially grow rapidly with limited investment of capital, labour or land.

Spin-off companies
"Spin-off" is a term used to describe a new company created to commercialize intellectual property (IP) developed at universities, institutes and other public research organizations (PROs). IP may be technology or new software program, a new plant variety or an idea for a new product or service. Usually spin-off companies are established jointly by the research institute and the researcher or inventor who has created and developed the respective IP.

Intellectual property (IP) is a term referring to a number of distinct types of creations of the mind for which property rights are recognized. Under intellectual property law, owners are granted certain exclusive rights to a variety of intangible assets. Common types of intellectual property include copyrights, trademarks, patents, industrial design rights and trade secrets in some jurisdictions.3

Spin-offs established at PROs are created in case there are no companies outside the PRO which are interested in purchasing and further developing the newly invented product or a process. The newly established company has the opportunity to develop many products in a specific area of interest to the researcher who established it. Therefore such enterprises are extremely valuable to communities where they are established since they might bring various positive outputs to local economy.

Senior enterprises

A senior enterprise in local environments is a micro business approach for enabling people to generate income outside the traditional work setting. The senior enterprise enables older people to gain additional income from interesting work and satisfy product and service needs of the community. Senior enterprises are attractive for number of reasons. They can produce income for individuals and communities. They can provide needed services and prove beneficial to the physical and mental health of older persons. 

Business support and intermediary organizations in support of innovations at local level

Although the basic technological knowledge and other competences of the agglomeration lie in companies, universities, research institutes and educational institutions, competent business support, development and intermediation organisations can harness these competences to better use and even participate in the process of creating new regional competences. The importance of such organizations is greatly underestimated in most cases by small companies. Therefore they are limited to a certain extent in getting the right information and advice in developing and implementing their innovative ideas. Similar is the pattern when comparing companies located in traditionally less economically developed countries and small enterprises operating in EU member states with well developed market economies. In clearly formulating his/her idea one always requires different information channels. In micro-companies most of the information comes from competitors, clients or in more informal environment such as friends, relatives etc. In most cases information from such channels is not enough in motivating an entrepreneur to start innovating. In this case most companies turn to various business support organizations, business networks, branch associations, etc. Such organizations and experts aid micro companies to access the right information, find partners and much needed finance. Motivation and determination increases when micro companies are presented with all benefits, detailed steps, challenges and eventual issues on the road to developing a successful innovation.

If you are an entrepreneur, private inventor, or SME it is important for you to look, search online or ask friends and relatives for local representations and offices of business support centres, Chambers of Commerce and Industry, Entrepreneurship Development Associations, Innovation Products Brokers, Innovation Forums, Technology Transfer Centres, Business incubators, Venture Capital Funds, SMEs Support Banks, Guarantee Funds, etc. The information and advice of the abovementioned organizations can assist you on how to develop or finance your innovation ideas.


1 http://en.wikipedia.org/wiki/Local_innovation_system
2 General description of start-up http://en.wikipedia.org/wiki/Startup_company
3 See the relevant section 7.1 on Intellectual property in the Innovation Guide