Searching for "rare diamonds"? Industrial districts and innovation in Spain and Italy

Purpose This paper aims to test the existence of the so-called industrial district effect on innovation (iMID effect) in Spain and Italy and to compare the intensity of this effect between both countries. There is previous evidence of this effect for Spain, although, to the best of the authors' knowledge, it has never been measured for Italy. Design/methodology/approach Innovation intensity by local production system is measured using patents per million employees and analysed using the mean, the median, 3D maps and statistical tests. Findings Industrial districts generate between a third and a quarter of all technological innovations in Spain and Italy. The evidence about the district effect in innovation in Spain is consistent with previous studies. The novelty is that there is also evidence of this effect for Italy and its intensity is higher than for Spain. Almost one-half of the industrial districts fit in the most innovative quartile of local production systems, and they are located in the most innovative part of each country. Research limitations/implications Limitations of this study include minor database issues. Implications include new focus on the general relevance of industrial districts as highly innovative local production systems and top innovators. Practical implications Reorientation of territorial and innovation policies. Social implications Effect on development and well-being through technical progress. Originality/value This article provides, for the first time, to the best of the authors' knowledge, a measurement of the industrial district effect on innovation in Italy. The paper compares the results between Spain and Italy and allows for generalization of previous evidence, concluding that highly innovative industrial districts are not "rare diamonds", revealing as an alternative and an extraordinarily powerful place-based innovation model.