Dynamics of knowledge diffusion: the ICT sector in Lombardy

Abstract

This paper analyses the evolution of the information and communication technology (ICT) industry in Lombardy, with a specific focus on the Milan metropolitan area, where most major ICT firms are located. Until the early 1990s, Lombardy's firms enjoyed a technological advantage, which led to relevant profits, innovative products on the markets, and the emergence of a competitive ICT district. Since the early 1990s, however, this positive trend inverted; local companies lost their competitive edge, and several firms restructured or closed. The restructuring process affecting this industry determined an evolution of the type of knowledge generated in the local district, which gradually moved production from full-fledged computing machinery to marginally-innovative software. Finally, the availability of financial capital originated by the 2000–2001 ICT frenzy stimulated the emergence of new companies, which sought a third, intermediate mode of innovation. Qualitative evidence collected by interviewing local ICT key representatives suggests that indeed ICT firms in Lombardy developed over time a specific mode of innovation, whereby externally-manufactured ICT products are complemented, and improved for the Italian market, with local innovations. The recovery of Lombardy ICT firms in the second half of the 1990s suggests a likely shift from a fully endogenous, to a creative application pattern of innovation.

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