The role of innovation for leveraging regional development

Abstract

Innovation exerts a central influence on the economy in every level: firm, industry, region, country and globally. Academics in business management have extensively explored the importance of the development of innovation for the firm, as well as for the industry. Studies at the regional level, in their turn, are more scarce. The primary goal of this paper is to verify the influence of product and process innovations introduced by the firms in a region on its economic development, considering as regions the states of Brazil. Using least square panel regression, we found that process innovation influences GDP growth positively after five years, corroborating the hypothesis that the effect of innovation is positive and takes some time to be perceived, with process innovation being faster than product innovation.