Social capital and the innovative performance of Italian provinces

Social capital has remained relatively underexplored in innovation literature due to the lack of consensus on the most suitable operationalisation for the analysis of innovative dynamics. This paper aims to fill this gap by looking at social capital as propensity towards civicness and prosocial behaviour that facilitates the circulation of nonredundant knowledge among otherwise disconnected groups. The quantitative analysis of the innovative performance of Italian provinces shows that social capital proxied by blood donations and participation into voluntary associations is an important predictor of innovative performance after controlling for 'traditional' knowledge inputs (R&D and human capital). In addition, instrumental variable analysis makes it possible to identify clear causal links between social capital and innovation, suggesting that social norms play an important role in shaping the incentives for knowledge generation, circulation, and accumulation.