Social capital and regional innovation in the aftermath of crisis: evidence from Italian provinces

Abstract

This paper investigates how regions’ innovation responses to economic crises vary with their level of social capital. Combining the literature on innovation along the business cycle with that about the role of social capital in spurring regional innovation, we argue that higher social capital levels should enhance the regions’ innovative resilience to crises, particularly for their bridging social capital. Using a diff-in-diff approach on Italian provinces (NUTS3) with respect to the 2007 recession, we find that provinces with higher bridging social capital exhibit lesser drops in innovation post-crisis, confirming expectations. However, bonding social capital does not show a similar effect.