Local knowledge composition and the emergence of entrepreneurial activities across industries: Evidence from Italian NUTS-3 regions

This paper investigates how the characteristics of the local knowledge bases, stemming from the accumulation and recombination of competences over time, spur the emergence of new entrepreneurial activities across industries at the Italian provincial level. To do so, we exploit information on the number of new firms appearing across diverse industries in each Italian NUTS-3 region (province) from 1997 to 2009 as an indicator of local entrepreneurial activity. To build indicators of both local technological knowledge stocks and local technological knowledge compositions, we collect information on patenting activity at the provincial level. Our findings suggest that the availability of local knowledge spillovers is not sufficient per se to trigger the creation of new firms. Indeed, looking at the properties of local knowledge bases, the rate of new firm formation appears to be higher in contexts featured by knowledge stemming from search activities shaped by the accumulated competences and dispersed across a wide area of the technology landscape. This suggests that, in Italy, entrepreneurship is mostly related to the exploitation of technological knowledge accumulated over time rather than to profiting from radical breakthroughs.