Barriers and Limitations in the Development of Industrial Innovation in the Region



20

Discussion and Conclusions

Analysis of various factors which constitute barriers to innovative success of industrial firms
have shown the principal barriers that hindered the realization of innovation their. The
importance in identifying these barriers tied to the need to determine an efficient public policy
in order to deal with such limitations. Effective treatment that can remove these barriers will
positively encourage the development of innovation and thereby contribute to the economic
growth of the region. This is the essence of the legitimate base of government policy
intervention where market forces are fail.

The results obtained from the analysis pointed to the high similarity in the principal barriers
between the firms in accordance to their branch affiliation and spatial location. The significant
limitations are those that regard to the highly risk involved with the engagement in
innovation. This are related on one hand to the to the lack of financial sources, and on the
other hand to the high cost needed for this engagement, thereby influence on the long return
on such investment. Additionally the lack of highly skilled labor also found to be significant
barrier in developing new products and processes. The great importance ascribed by the firms
to these barriers where focused mainly in the hi-tech sector, yet in identical extent also in the
traditional industry. Consequently these attributes must be used as strong pillars without
doubt in any basis of public policy amid in supporting and encouraging the development of
innovation, without direct relation to specific industrial sector.

Efficient public policy apparently could manage most of the attributes identify as principal
barriers towards innovation. Thus, supportive incentive policy based on financial grants given
to R&D activities could help in reducing the level of risk involved in the development of
innovation. On this background it is worth to mark the significant R&D grants given by the
OCS (Office of the Chief Science) in the Ministry of Industry and Commerce1. This become

The support is anchored in the Law Encouraging Industrial Research and Development-1984, aimed mainly at
inducing the development of knowledge-based industry in Israel. R&D grants in Israel are based on a fixed rate



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