industrial firms. Given the great importance attributed to the limitation variables on the ability
of a firm to create new technologies, particularly as regards the level of innovation, the study
analyze those variables related to the location differential. The study also examines whether
the structure of industrial branches affects the prescience or absence of barriers and
limitations on the creation of innovation by the firms.
The remainder of the paper is organised as follows. Section 2 provides the context for the
study including a brief overview of the role of innovation in the economic growth of the
region. Section 3 describes the methodology of the study. Section 4 then extends the analysis
to investigate the impact of verious limitations factors on the ability of the firm to be engaged
in innovation. Section 5 concludes with a review of the implications for public policy.
2. The Role of Innovation in the Economic Growth of the Region
Technological Progress and the Innovation Process
The most powerful paradigm for technological progress remains Schumpeter's model of
evolutionary process (Schumpeter, 1950), and the interpretations and extensions of the model
(Nelson and Winter, 1982). According to this model, ideas, innovations and technologies
compete for resources in an environment characterized by economic scarcity. Ultimately, the
technology most suited to the times and the condition triumphs, though the process may be
long, time-consuming and somewhat inefficient. The Schumpeterian evolutionary models
imply that as technology ages more and more firms gain the opportunity to learn and use it, as
they observe other firms and adapts it.
Innovation is concerned with "the search for and the discovery, experimentation,
development, imitation, and adoption of new products, new production processes and new
organizational set-ups" (Dosi, 1988, p. 222). It enables producers of products and services to
operate more efficiently and thus increases the competitive edge of the economic unit. It also
improves their ability to trade and market their product(s) or services on the local, national or
international markets. It is therefore sufficiently clear that technological change and
innovation processes can serve as the principal vehicle for advancing and promoting the
growth and development of regions.
Diffusion of Innovations
The role of information and knowledge in the process of technological change and the
diffusion of innovation cannot be over emphasized. Advanced means of communication serve