Local context and firms creation: The case of biotechnology in Italy

This paper explores Italy’s biotech industry. This is the case of a new industry formation in a hostile institutional context. Our goal is two-fold. First, it is to extend our understanding of the role of institutions on firm formation and industry creation. Second, it is to offer prescriptive evidence for those regions that are trying to encourage entrepreneurship in innovative industries or increment existing systems of innovations. We adopt the interpretative lenses of the institutional theory. Our work aims to discuss the role that institutions (by the meaning of regulations, policies, and fiscal measures) provide to the development and change of industries around the world. We offer a comparison between Italy and other European countries in order to advise rules and suggestions to improve the competitiveness of the Italian biotech industry and firm formation. We recognize that the Italian institutional context is hostile to new industry creation because the rules and regulations do not support new firm formation. Moreover, Italy represents a context that shows a high level of risk aversion to radical innovation such as biotechnology.