Therefore it is worth to find out weather the barriers and limitations to innovation are
common phenomenon to various industrial sectors and regions, thus could handle with more
general policy, or it is differ and there is a need to determine specific strategic to each
industrial sector or in each sub-region.
One of the difficult mission of the technological initiator is the achievement of financial
sources that are vital need for the survival of the firm and have a positive effect on the
innovativeness of the firm. Studies confirm that availability of capital is crucial for the
economic growth of the firms. The absence of financial sources stimulates the failure of the
firm, by limiting the firms in its investment and growth (Brophy and Shulman, 1993 ; Erramili
and D’souza, 1993). The investment engaged in the initial stages of the development includes
double risks. First the long period of investment in R&D needed to complete the
development. Secondly, the competition and the dynamic that exist in the market, especially
in the hi-tech sector, increase the risk due to lack of technological adjustment of the new
products under developed.
Accordingly the hypothesis to be test is that the lack of financial sources and the risk factors
are the most significant barriers to the development of innovation. Their existence has
negative significant effect in any location.
However, we hypothesized that there exist other differences between the metropolitan areas
and the peripheral regions in regard to the various barriers hindering innovation their, due to
the different characteristics of these two types of regions. We also hypothesized that the
barriers to innovation vary also according to industrial affiliation, based on the nature of the
industrial sector. While the Hi-tech industry characterized by a multi-disciplinary efforts
required for developing an innovation, this kind of operation in the traditional industries, in
many of the cases is ‘one man hand maker’. Therefore it is expected that the level of
impotence regards to the limitation factors will be higher within firms belonging to the hi-tech
sector, than in the more traditional industrial sector.
Another test regards to the Israeli strategic choice to concentrate mainly in R&D intensive
activities in the development of high technology industry (Roper and Frenkel, 2000).
Accordingly, it is hypothesized that the absence of technology or R&D services are very
limited and does not hindered the development of innovation, even in the remote regions
where firms can rely of outsourcing R&D services. Conversely, is the lack of highly skilled