Designed in Italy - An Unrecognised Italian Innovation Model?

Italy performs badly on the European Union‘s European Innovation Scoreboard (EIS). A closer look at the statistics show that the ratio of outputs from the innovation to inputs is above average for Italy, and that Italy is among the top performers on sales of new to market products and industrial designs. Thus it seems that Italy and its companies are weak in innovation drivers but relatively strong in innovation performance. Because many of the input indicators are leading indicators, this situation might suggest further decline in Italian innovation performance in future years. Alternatively, there may be some differences in the Italian small business model that enable more innovation output than the input measures suggest. With the apparent paradox of Italy‘s relatively high innovation output in mind, this chapter reports on the findings of a study of 13 Italian firms from a range of industries, but all had introduced at least one product innovation during the past three years. Data were collected on attitudes to innovation climate, influences on innovation decisions, alliances and networks, innovation behaviour and innovation profiles using the methodology. The interviewees described the innovation climate as poor. Yet, despite the poor perceived climate, the firms were active innovators. Two-thirds declared that they had introduced more than 10 innovations during the three years prior to the interview, with an average investment of 12 per cent of turnover, while the remainder had invested an average of 5.2 percent. Most firms were successful: the average age of the firm was 36 years, and the average increase in turnover over the three years preceding the study was more than 12 percent. Innovation in Italian firms is strongly driven by customers. External professionals, such as lawyers, accountants and venture capitalists do not influence innovation. Both customers, and to a lesser extent, suppliers, are considered to be important partners in innovation, involved in particular in joint product development, joint promotion and joint research. Although the amount of government funding for innovation in small firms has increased in recent years, the firms in our sample did not consider government support a strong influence on innovation. The strongest firms in our survey were all immersed in strong collaborative contexts, most of them within clusters of firms in industrial districts among firms that produce related products. The Innovation Diagnostic Diamond (IDD) framework produced diagnostic indices for firm performance in marketing, commercialisation of innovations, resources capability and strategic management. Apart from two of the weakest firms, most firms scored well on all or nearly all of these indices. The survey also classified prospective innovations by their RENT Profile, reflecting the anticipated sales volume, rate of profitability and length of lifecycle. This classification did not seem consistent with either firm performance or performance on diagnostic indexes. We discuss some assumptions made in scoring the profile that may explain this apparent anomaly. The study suggested some opportunities for future research that might explain the apparent Italian innovation paradox. These include gaining a better understanding of innovation activity in the 46 per cent of firms too small to be included in national innovation statistics; considering further the value of short-term, low protection, design-based innovation and disaggregating innovation indicators to identify a wider range of models of innovation success.