Main actors in the innovation process (Regions and cities)

Innovation agglomerates by localizing within particular geographies • for economic reasons (as proximity reduces the costs of transactions and transportation, and firms in close association stimulate the creation and diffusion of innovation through improved awareness and knowledge of each other) • for social and cultural reasons (including the advantages derived from shared identity and higher trust in affiliated and cohesive groups; communications are assisted by proximity because knowledge is sticky and travels badly from its source, especially when it is complex or tacit and cannot be written down) These factors contribute to a local culture, or ‘buzz’, that is technology-focused, risk-taking, and highly competitive, and it creates a virtuous circle of initiative and reward. It is often cities that provide the locus of innovation.