In order to foster local development, policymakers promote and support innovative start-ups by issuing interventions, measures, strategies, regulations, schemes, and laws. Scholars and experts underline the usefulness of these initiatives, but question their effect: the adoption of limited or partial actions to support innovative start-ups may not be able to foster local development. The formers agree that initiatives are effective when they enact comprehensive start-up laws, which consider and define several aspects contemporarily.
The Italian Start-up Act
In 2012, the Italian Government enacted the Start-up Act, the first-ever global law promoting and regulating start-ups (Law 221/2012). This law defines the legal concept of start-ups, recognizes a special regime for these companies, and – to a larger extent – introduces a series of concrete administrative, tax, civil, and commercial-related measures adapted to the unique nature of these start-ups.
Sub-paragraph h of paragraph 2 of chapter 25 of Law 221/2012 enlists three indicators that can foster local development: A) investments in R&D activities; B) hiring experienced researchers (employed as workforce involved in research activities); and C) holding a patent/property rights. Innovative start-ups must satisfy at least one of them.
The effect of the Italian Start-up Act according to different perspectives
Ten years after the enactment of the Italian Start-up Act, it is interesting to assess its impact and evaluate whether and to what extent it succeeds in supporting innovative start-ups and fostering local development. This is the main focus of the paper “Designing effective policies for innovative start-ups: Lessons learned in Italy” published in the Journal of Business Venturing Insights. The results of several previous studies – which look at the same sample of start-ups, but from different perspectives – are collected and compared in order to offer a broad overview and a comprehensive evaluation of this law. Specifically, four perspectives are analysed: geographical, individual, technological, and dimensional.
Regarding the geographical perspective, results reveal that hiring experienced researchers and holding a patent generates economic development, while social development is granted when entrepreneurs hold only a patent in the macro-region of the North of Italy. In the macro-region of the Centre, all three innovation-related indicators generate economic and social development. Finally, in the macro-region of the South, hiring experienced researchers and holding a patent foster economic and social development. When considering the last two macro-regions, it is clear the nexus of causality between independent and dependent variables.
About the individual perspective, elaborations reveal that the factors affecting the performance are the same for stereotyped and female entrepreneurs, but they differ when young and ethnic entrepreneurs are considered.
Concerning the technological perspective, although consistent differences exist among Italian provinces in terms of technological regime (the provinces in the northern regions reveal higher values of the technological regime than southern provinces), the technological regime does not boost or hinder the effect of independent variables on local development.
Eventually, regarding the dimensional perspective, the same three indicators cited above give birth to a virtuous model for innovative start-ups (based on hiring experienced researchers and holding a patent) and a vicious model for innovative SMEs.
The above results sound like warnings about Law 221/2012.
What can we deduce from the results?
Since the same parameters are not effective for all innovative start-ups, some critical analyses and reflections are mandatory. Is it worth enacting a national law to foster local development? One immediate answer may be no. A national law could be of limited usefulness, and its enactment may prove to be fruitless since it is impossible to generalize the impact of official indicators. As already said, local development is achieved in a macro-region and not in another, or by a specific profile and not another, and so on.
Should national governments avoid enacting national laws to foster local development? The answer should be no. Although the same law may generate different effects, it still has an effect. To date (July 2024), almost 13.000 innovative start-ups have been created in Italy and local development has been fostered.
Which lessons can we learn from Italy?
The Italian Start-up Act defines three innovation-related indicators and requires innovative start-ups to satisfy at least one of the three indicators. Entrepreneurs can select the indicator/s to meet according to a specific perspective – geographical, individual, technological, or dimensional. This approach allows us to speculate on what we may call “the self-customization” of local development policies. Just like in the field of marketing, where each consumer tries to customize the offer according to their preferences, each potential entrepreneur may define their policy by satisfying at least one indicator according to their specific perspective.
In order to foster local development, policymakers should define appropriate indicators and support all the potential entrepreneurs in choosing the one(s) which meet the latters’ specific perspective.
Read the full paper here to find out more: https://www.sciencedirect.com/science/article/pii/S2352673424000386
Author bio
Diego Matricano, PhD, is Associate Professor at the Department of Management of the Università degli Studi della Campania “L. Vanvitelli”, Capua, Italy, where he teaches “Management of Innovative Startups” and “Innovation Management and Business Modeling”. While a doctoral candidate, he studied at the Jönköping International Business School, Sweden. Later on he was a visiting scholar at The Wharton School, University of Pennsylvania, where he also participated in a research project at the Sol. C. Snider Entrepreneurship Research Center directed by Prof. Ian MacMillan.
His research focuses on entrepreneurship and innovation, startups and digitalization of firms. In June 2024 he won the Best Book Award assigned by the European Academy of Management – EURAM. Diego Matricano makes his home in Santa Maria Capua Vetere, a town near his native city of Caserta, in the charming countryside in the south of Italy.
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