Firm characteristics, location and regional innovation: A comparison between Israeli and German industrial firms

In recent years, a growing number of researchers have been attempting to gain a better understanding of the variation in the rate of spatial innovation of different industrial plants. Several of these studies have investigated the similarity and dissimilarity of spatial innovation between countries. This paper reports the results of a large study carried out jointly by a team of researchers from Germany and Israel. In Germany, the study focused on Baden, the western part of the state of Baden-Wurttemberg; and in Israel, on the Northern district. Altogether in both countries, more than 400 industrial plants belonging to the fastest-growing industrial branches (electronics, metals and plastics) were included in the study. The use of simple statistical models, augmented by multi-variate logit models, enabled us to point out the similarity and dissimilarity in spatial innovation patterns in the two countries. The results support the hypothesis that expenditure on R&D is a good surrogate for the percentage of innovative firms among all firms in its sector, regardless of the industrial branch to which the plants belong. In general, we can conclude that there exists a strong similarity in the frequency of industrial innovation in both countries and that the share of innovative firms in the high-tech industries is significantly higher than in the traditional industries. On the other hand, the distribution of spatial variations in the share of innovative firms in Israel is greater than that found in Germany.