Innovation in regions: What does really matter?

The literature on systems of innovation conceptualises innovation as an evolutionary and social process of collective learning. But three main questions remain open: is this learning process rather internal or external? What are the boundaries of this process? Is this social process voluntary or rather unintended? This paper strives to tackle those questions by analysing the determinants of regional innovative levels in French manufacturing industries. By estimating a knowledge production function we find that building external interactions is of greater importance than developing internal innovative competences. Second, unintended knowledge flows have less influence on regional innovative performance than deliberate ones. Lastly, the French innovation system looks regional rather than sectoral.