Innovation and the knowledge-base for entrepreneurship: investigating the drivers of SME Innovation across European Regions using fsQCA

Using a relevant 2019 data set, 236 regions across 26 European countries are investigated, focusing on four, interlinked, conditions of potential relevance to SME innovation, specifically measures focused on levels of human capital, internal firm innovation, innovation collaborations and broader knowledge collaborations between public and private sectors. The methodology applied uses a configurational approach to elucidate relationships, specifically fuzzy-set Qualitative Comparative Analysis (fsQCA) to evaluate how these conditions affect sales of new-to-market and new-to-firm innovations as a percentage of total turnover for SMEs in each region against the EU 2019 average (NMFS). In addition to existence of the classic “core” region “innovation ecosystem” recipe, having presence of three of the four conditions (in-house innovation being non-relevant), analysis reveals innovation policy may need specific tailoring in certain types of regions. This suggests greater collaboration is required to overcome more extensive absence of other parts of the Regional Innovation System, in-house innovation required to overcome lack of education alone. The main contributions of the research are to generate a more comprehensive evaluation of the complexity of innovation at the regional level, graphical ‘map’ based elucidation of findings also contributing to establishing a baseline for future analysis for European regions’ SME-innovation performance.