Traditional SMEs and innovation: the role of the industrial policy in Italy

The aim of this paper is to match the Italian small-medium firms’ (SMEs) need for technological innovation and the state and regional aid programs aimed at supporting innovation and technology. The purpose is to highlight existing capabilities and new opportunities in support of Italian SMEs requirements in innovation. The paper reports the results of two empirical research projects recently carried out at Ceris-Cnr (Institute of Research into Firms and Development - National Council for Scientific Research). After a framework of the most important innovation policies the Italian aid programmes for innovation and technology are described. In particular the role of the Italian Regions is analysed in depth. The empirical research confirmed that the approach to innovation of Italian SMEs tends to satisfy the demand of existing market in the best possible way compared with competitors. Product improvement follows incremental processes. The most common way of introducing new technology is the purchase of new machines and equipment to reduce costs and improve quality. All the industrialised countries tend to favour the linking of the SMEs with external sources of knowledge. The research shows that such a policy clashes with the SMEs’ capacity for absorbing innovation. Most of them lack the technical structures (technical office, design department, R&D laboratory, prototype department, etc.) and graduate staff capable of interfacing with the research world.