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Abstract:

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SERC/Urban and Spatial Programme Discussion Paper
The Bright Side of Social Capital: How 'Bridging' Makes Italian Provinces More Innovative
Riccardo Crescenzi, Luisa Gagliardi and Marco Percoco November 2011
Paper No' SERCDP0096:
Full Paper (pdf)

JEL Classification: O31; O33; R15


Tags: innovation; social capital; knowledge transfer; regional development

Social capital has remained relatively underexplored in innovation literature. Existing studies have failed to reach a consensus on its impact on local innovative performance: some empirical analyses emphasize a positive effect, others speak about a ‘dark side’ of social capital. This paper aims to fill this gap by shedding new light on the differential role of ‘bonding’ and ‘bridging’ social capital. The quantitative analysis of the innovative performance of the Italian provinces shows that social capital is an important predictor of innovative performance after controlling for ‘traditional’ knowledge inputs (R&D investments and human capital endowment) and other characteristics of the local economy. However, only ‘bridging’ social capital – based on weak ties – can be identified as the key driver of the process of innovation while ‘bonding’ social capital is shown to be negative for innovation. Instrumental variable analysis makes it possible to identify clear causal links between bridging (positive) and bonding (negative) social capital and innovation.