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Because of the increasing globalisation of the economy and reinforced competition, technological change has become an important factor in the restructuring process and in the competitive position of firms and regions. In this paper the author investigates to what extent the innovation process is differentiated across space and in particular how this process is shaped by the locational conditions as well as by the structures and strategies of firms in selected regions. To develop a framework for the analysis, contrasting views about the innovation process at the regional level are presented. In the traditional linear innovation model (product-cycle theory and innovation diffusion) relevant locational factors are stressed and an hierarchical pattern of innovation in space is arrived at. More recent approaches such as the evolutionary and network theories point to the relevance of historically evolved firm structures and strategies. The analysis of the Austrian case demonstrates that each of these models has a certain relevance. There was a pronounced differentiation of innovation across space, which was partly in line with the hierarchical model, such as a concentration of R&D and product innovation in the largest agglomerations. However, strong innovation activities, corresponding more with the evolutionary model, were in addition identified in newly industrialised or even in some of the peripheral rural areas. Structural and behavioural features of the firms, such as organisational characteristics (status, functions, and skills), the strategic orientation as well as network links, in addition to locational factors, were relevant for these patterns.
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