[6] Innovation and R&D in the Information Society - the Regional Dimension

Innovation and entrepreneurship are important sources of regional growth. Regional Innovation Systems (RIS) are the structures or networks that support knowledge and technology transfers, crucial to business formation and innovation.

Key to RISs are the softer aspects of social capital. Human capital (the individual) and social capital (the community or group) is not only a function of the formal education and training received through secondary and post-secondary institutions but also harder to measure tacit knowledge. Tacit knowledge is the driver behind turning knowledge into innovation. This is attained through a value-added knowledge transfer process enabled through the use of learnt norms and conventions among people, researchers, companies and government. These 'intangible assets' range from know-how (managerial, scientific, technical, logistical, etc) to networks, trust and goodwill that are valuable but difficult to measure.

This tacit knowledge is key to the flow of knowledge through universities, technology institutes, industry clusters, and research and development centres. This knowledge transfer results in the creation of spin-offs and new business start-ups and provides the ingredients for the formation of an entrepreneurial culture.

In fostering long-term growth effort has also focused on the framework conditions for fostering new enterprise formation and growth of Small and Medium size Enterprises (SME). Start-up firms have gained significant attention in the innovation process as they represent rich sources of new ideas. The number of new start-ups in a region is often used as a proxy measure for the level of innovation and long-term economic growth - as SMEs in theory will become larger organisations with a growing economic multiplier. The formation of SMEs can result from spin-offs from larger corporations or from other centres of research such as universities and colleges and through developing an enterprise culture that supports potential entrepreneurs with the right mix of business support services, business incentives and financing (venture capital) and skilled workforce.

Measures of the number of higher education centres, university institutes, industry clusters and the number of new business formation rates and patent registrations have traditionally been used as measures of the level of entrepreneurialism and innovation capacity in a region.