Team Campania, Italy, participated in MIT REAP Cohort 6 (2018-2020). The team was led by stakeholders from the University of Parthenope Naples and Campania Region’s ministry of Startups, Innovation, and Internationalization, with key representation from BPER Bank, and leading corporates and entrepreneurs from the region. Team Campania sets out to improve the innovation capacity and entrepreneurial capacity of Italy’s southern region through a four-pillar strategy:
- supporting the growth of startups,
- increasing private capital flows,
- building the Campania ecosystem’s culture of entrepreneurship, and
- developing an innovative Blue Economy pole in the region.
In this article, originally published in Politica Meridionalista, Team Campania’s Champion Marco Ferretti and Project Manager Eva Panetti reflect on the team’s journey up to and through MIT REAP, the evolution of their strategy, and their achievements to date in accelerating Campania’s innovation and entrepreneurship ecosystem.
Campania and its Adoption of the MIT REAP Model of Regional Development
July 2020: In our inbox, we receive an email from the prestigious Massachusetts Institute of Technology’s Regional Entrepreneurship Acceleration Program (MIT REAP) with the subject: Team Highlight: Campania, Italy. The email, addressed to the entire MIT REAP community, describes Campania as a case of international success in the management of its innovation ecosystem. We can barely hide our emotions. MIT drives the development of one of the most competitive innovation ecosystems on the international scene. We feel proud as Italians to receive this international recognition, and proud of a region often portrayed by the international press as the setting for crime; a region recognized more for its tourism than for its entrepreneurial and innovative potential.
The path to this recognition (which represents only a piece of the puzzle of change that our region is implementing) is a long one, made up of people and meetings, research and planning, in which universities played a central role. It was, in fact, academic curiosity that led Marco Ferretti – now Full Professor of Management at the Parthenope University of Naples – to study at MIT in the late 80’s. It is here that he first came into contact with the institution whose synergy of science and business was a springboard of development for the university town. In the 80’s, Cambridge became a popular destination not only for students and scientists, but also for investment firms, large companies and startups from all over the world.
After earning his MBA at MIT’s Sloan School of Management, Marco Ferretti continued his academic career in Italy, and, inspired by his experience in America, continued his study of issues related to regional development driven by entrepreneurship and innovation. In 2010, Ferretti formed a research group specializing in local innovation systems at Parthenope University of Naples’ Department of Business and Quantitative Studies (DISAQ). The group’s interest lies in the dynamics underlying the birth of technological clusters and innovative poles. It studies business networks and the increasing role of universities in models of regional development policies, especially in emerging economies such as South Korea, the Arab Emirates and Iran (Ferretti and Parmentola, 2015).
Over the years, the group has monitored advancements in the area of innovation ecosystems made at MIT, and particularly, the Industrial Performance Center (IPC) led by Professor Richard Lester and Elisabeth Beck Reynolds. The IPC was born with the intention of guiding the debate on industrial innovation policies in the U.S. and represents a reference point in the trend of innovation ecosystems. A dialogue between the IPC and DISAQ was born in 2010, consolidated in 2017, with research collaboration on innovation ecosystems, and formalized that same year with the invitation to send a Parthenope Visiting Researcher to the IPC at MIT.
Eva Panetti, now Assistant Professor of Management at Parthenope University of Naples, was hosted by MIT to work alongside IPC researchers to conduct research on the Boston biopharmaceutical innovation system (Panetti et al., 2019). Immersed in her analytical unit – the Kendall Square biopharmaceutical cluster – Eva Panetti interviewed many of the protagonists of the ecosystem – top managers, heads of Big Pharmas such as Novartis, young entrepreneurs, distinguished academics, and representatives of public institutions – but what struck her most was the geographical concentration of the activities of these players, which can be traced back to little more than one square kilometer. This observation would inspire the Parthenope Group’s future work on the role of geographical proximity in innovation.
During that period, Eva Panetti also had the opportunity to take a course at the MIT Sloan School of Management on innovation ecosystems, where she met Professor Fiona Murray and Doctor Phil Budden, who taught the Regional Entrepreneurship Acceleration Lab course. This encounter gave her the opportunity to study real-world applications of the innovation ecosystem model which, up to that point, she had considered from only a theoretical point of view. Panetti learned about the American development model of innovation systems and its application in regional contexts far from the U.S. She appreciated its adaptability and effects, thanks to the numerous testimonies offered by managers, policy makers and academics from countries such as Japan, Nigeria, the United Arab Emirates, Venezuela etc., who explained regional acceleration programs inspired by the MIT model.
During that time, Panetti became aware of MIT’s Regional Entrepreneurship Acceleration Program (MIT REAP), through which the MIT faculty aims to support global regions in the design and implementation of a strategy for local, innovative business development, based on MIT research and frameworks. This competitive program works with regional teams composed of 8 high-profile players from the academic, business, institutional and financial worlds, who collaborate and are mentored through a two-year program provided by MIT expert faculty. For the Parthenope group, the program represented the possibility of coming full circle with respect to our collaborative experience; allowing us to put the knowledge learned through research to the service of our own region. For us academics, this represents one of the highest forms of realization.
Upon learning about MIT REAP in June 2017, Eva Panetti immediately turned to Marco Ferretti, who with great enthusiasm recognized an opportunity for the re-launch of the Campania economy. The Parthenope Group, formed by Marco Ferretti, Eva Panetti, Francesco Calza and Adele Parmentola then set off in search of the other players to involve in the team. A long, six-month period of work followed, during which the Parthenope Group worked to identify the most suitable profiles to join the team, and created an interesting design hypothesis to be proposed to MIT.
The Campania Region Councilor for Innovation, Startup and Internationalization, Valeria Fascione, was among the very first interlocutors contacted by the Parthenope Group to enthusiastically welcome the project, which she considered in line with her strategic and programmatic vision of re-launching Campania’s startup ecosystem. Shortly after, Vito Grassi became involved. Grassi, today Vice President of Confindustria and President of Graded, side by side with Ludovica Landi, COO of Graded, bears a vision of development of the region through innovation and the attraction of young talent, as evidenced by the countless innovative projects that the two have been pursuing with determination for years.
From the industrial sector, we also found Giovanni Ranieri, CEO of Next Geosolutions, a passionate company that uses advanced technology for offshore seabed exploration, linked to the maritime tradition of our region. Finally, we obtained the participation of the ship owner Guido Grimaldi, a major player in the Italian maritime transport and logistics industry, and Antonio Errigo, Director of the Logistics Association of Sustainable Intermodality.
Thus composed, the team, although well-varied, still lacked a fundamental element: a representative of the financial system. We knocked on the door of many private funds and banks and met Pierpio Cerforgli, Deputy Director of BPER Banca, a tireless Modenese with the mission of modernizing the traditional banking system, and with strong ties to Campania.
Finally, the team was complete. In May 2018, after a long selection process, Team Campania officially joined the MIT Regional Entrepreneurship Acceleration Program (MIT REAP) with the aim of re-launching the competitiveness of Campania’s entrepreneurial ecosystem. It was the beginning of a path that would last two years.
The MIT REAP development model is based on a complex process and methodology, difficult to summarize in a few lines. However, the basic assumptions are captured in the following points.
1. Identification of regional comparative advantage.
Since the days of David Ricardo’s theory of international trade, it is known that every nation has a productive specialization that allows it to maintain a competitive advantage and a more efficient use of its resources. The MIT REAP model applies this principle to regional economies, abandoning the idea of adopting a mainstream sectorial specialization, but instead identifying and enhancing sources of greater competitiveness of the region (sectorial, technological, geostrategic, etc.).
2. Priority of Innovation-Driven Enterprises (IDEs).
Another important principle of the model lies in supporting the growth of startups whose competitive advantage and growth potential are driven by innovation. The role of IDEs in the development of ecosystems is of fundamental importance, given their ability to grow rapidly and their potential for creating jobs by virtue of a multiplier effect (the Moretti multiplier), according to which, for each new tech job, at least five more are generated in the services that gravitate around it (Moretti, 2013).
3. Increasing regional Entrepreneurial Capacity (eCap) and Innovation Capacity (iCap).
One of the fundamental functions of innovation ecosystems is to help bridge the gap between the commercial economy and the knowledge economy (Jackson, 2011). Therefore, a good regional development strategy must aim to increase not only the innovation capacity of a region (through, for example, incentives for research, training of STEM graduates, etc.) but also its capacity to create a favorable environment for the birth and dimensional development of new enterprises (eCap), thus facilitating the commercialization of research and innovation results (e.g. incentives for academic spin-offs, financing for innovative startups, etc.), creating value in the real economy of a region.
4. The Innovation Ecosystem Stakeholder Model.
Initially, the approach to the development of innovation ecosystems was based on the synergy between three key players: universities, businesses and government, defined as the three propellers of the local development engine, based on the commercialization of scientific research results and the preparation of policies to support university-enterprise relations. Over the years, this model, known as the Triple Helix (Etzkowitz, 1996) has left room for a broader interpretation of hybrid cooperation as an engine for regional development, expanding the parterre of the protagonists who are generally actively involved in the development of the region. The MIT REAP model, for the first time, talks about the role of large companies and financial institutions in the development of local innovation ecosystems. It demonstrates the potential of a pentagonal development model: alongside universities, large companies, PMIs and the government, major players in the world of finance appear for the first time; venture capitalists, business angels, investment funds and banks.
5. Program and Policy Interventions (PPIs).
After diagnosing the health of the ecosystem, it is a good idea to intervene on the points of greatest weakness through a mix of strategic interventions of various kinds, i.e., program and policy initiatives. PPIs envisage long-term policies (generally undertaken by institutions) capable of causing lasting change in the context in which the ecosystem’s resources are distributed, as well as specific medium and short-term actions to be undertaken by any other group of stakeholders (e.g. universities, companies, investors) that can act on specific aspects of the ecosystem, and whose effects can be monitored (for example accelerators, early-stage investments, mentorship networks, prizes and competitions.)
6. The Role of Backbone Organizations.
Finally, for the purposes of implementation and strategic interventions, the MIT REAP model provides for the establishment of a backbone organization, generally in the form of a technical committee that assumes operational responsibility for the management of the strategic plan, composed of representatives of the institutional, academic, entrepreneurial, financial and corporate world.
The MIT REAP Model in Campania
The adoption of the MIT REAP model in Campania was framed within a two-year period (May 2018 – October 2020), during which Team Campania underwent intensive training from MIT’s Sloan School of Management and received continuous support from MIT faculty through face-to-face workshops, conference calls and a dense exchange of documents and reports. The first phase of the program was a diagnostic phase, in which we dedicated ourselves to the study of the entrepreneurial and innovative capacity of Campania’s ecosystem by analyzing data and conducting a survey on a large sample of regional entrepreneurs. The data showed the region’s good potential in terms of innovation and entrepreneurship: Naples is the third city for innovative startups in Italy, and Campania is the second region for the number of entrepreneurs under the age of 35 (ISTAT, 2018). The data on total expenditure on Research and Development (first region in southern Italy) and the number of researchers (over 24,000) is also reassuring.
Among the region’s most dynamic sectors, the sea economy stands out. Driven by Campania’s large shipping groups and strengthened by the geostrategic position of the region on the Mediterranean, as well as by the prospects of future investments linked to Special Economic Zones, the sea economy sector represents an important lever of regional competitive advantage.
Although this data represented a good starting point for the development of the ecosystem, the study also revealed many critical issues, including startups’ strong dependence on forms of public financing and consequently a low presence of risk capital flows in the region: in Italy, in 2018, only 4% of venture capital investments made in Italy financed Campania companies, compared to 56% in Lombardy (AIFI, 2018). In addition, the entrepreneurs interviewed complained about a low level of collaboration between local stakeholders (only 16% declared that they collaborate with universities) (MIT REAP – The State of Innovation & Entrepreneurship in Campania, 2019). These results have guided the strategy of Team Campania, which, together with MIT, is committed to defining concrete initiatives as part of a strategic plan (2020 – 2025), based on 4 fundamental pillars and illustrated in detail as follows:
Pillar 1. Support for the growth of startups.
Premise: Although Campania has a high number of innovative startups, one of the main problems is poor managerial capacity within the entrepreneurial teams, prohibiting the full exploitation of innovations on potential markets, which is the aim of entrepreneurial effort. Therefore, we have designed a package of initiatives aimed at strengthening the managerial skills of new entrepreneurs, accompanying their entrance onto the market, and ensuring financial support in the startup phase.
a) The Open Innovation Platform of the Campania Region.
The Open Innovation Platform is a collaborative tool developed and managed by the Campania Region to encourage and support the meeting of demand for innovation from large companies in Campania and the offer of technological solutions proposed by regional startups.
(http://openinnovation.regione.campania.it/)
b) Knowtrack.
Knowtrack is a virtual accelerator funded by DISAQ of Parthenope University to support the next generation of new business ideas and to guide their transformation into startups, as well as to strengthen the managerial skills of existing startups in order to contribute to their growth. The accelerator offers mentoring services, support for business planning and participation in public funding calls, as well as consultancy services for the receipt of private investments. (https://www.disaq.uniparthenope.it/knowtrack/)
c) Public Notice “Campania Startup 2020”.
This is a total allocation of 5 million euros (on an annual basis) by the Campania Region to support the creation and consolidation of innovative, knowledge-intensive startups and to increase the competitiveness of the production system through the development of new, highly innovative products, processes and services (maximum € 300,000 / beneficiary). (http://regione.campania.it/regione/it/news/regioneinforma/avviso-pubblico-campania-start-up-2020).
d) Public Notice: “Innovation and Technology Transfer”.
This offers support to Campania companies in carrying out feasibility studies (Phase 1) and projects (Phase 2) consistent with the European Union Regional Strategy for Research and Innovation for Smart Specialization (RIS3). It includes a total allocation of 5 million euros (on an annual basis) by the Region of Campania to support the innovation activities of existing companies by financing, on the one hand, feasibility studies to explore the commercial potential of innovative ideas developed and, on the other, technology transfer and first industrialization projects for innovative companies who have high potential. (http://porfesr.regione.campania.it/it/news/primo-piano/in Tecnologia-etrasferimento-tecnologico-sostegno-alle-imprese-campane-nella-realizzazione-di-studi-difattibilita-fase-1-e- projects-phase-2-coherent-with-la-ris3)
Pillar 2. Increase in private capital flows.
One of the other critical issues that we have encountered in the ecosystem concerns the low survival rate of startups after five years, as well as a poor dimensional growth that makes them unattractive for capital injections or corporate and financial acquisitions. One of the possible causes lies in the widespread dependence of startups on public funding, which albeit a valid tool in the startup phase, evidently exerts a lower competitive pressure than that exerted by the profit objectives of private funds. Therefore, we have proposed a series of initiatives and programs that would encourage the flow of private capital into the region by reducing the risk for the private investor, as well as by increasing the visibility of regional startups to an audience of international investors.
a) Support for Entrepreneurship and Innovation in Southern Italy (SPINTAS).
The Parthenope Group has developed a proposal for the optimization of a portion of the National Fund for Innovation’s financial resources (FNI – Budget Law 2019), presented to the Parliamentary Commission on Productive Activities, Commerce and Tourism. This is a measure of matching funds, or the establishment of a fund for the granting of subsidized loans to Venture Capital and Private Equity funds that invest in the South (to the extent of 50% of the single operation), in exchange for the opening of an operational unit of the fund in one of the southern regions where the beneficiaries of the investment reside (proximity constraint).
b) MIT Alumni Angels Club Italy.
This is the establishment of an association of MIT Italian alumni, with the aim of creating a network between them and the entrepreneurs of the South through mentorship programs and events, in order to create business angel investment opportunities.
c) The Diaspora Project.
A conversation with Professor Bill Aulet of MIT gave birth to the idea of creating a network between successful Italian-American entrepreneurs – sons of the Italian Diaspora of the 20th Century – and new entrepreneurs from Southern Italy, in order to start a mentorship program and activate investment opportunities, thereby exposing our entrepreneurs to the international experience of top managers who wish to rediscover their origins through business.
Pillar 3. Culture of entrepreneurship and ecosystem
Our studies revealed a low propensity for entrepreneurship among the younger generations, often worried about the risks associated with starting new businesses and a lack of confidence in institutional support mechanisms in the event of bankruptcy. Furthermore, the low aptitude for collaboration with local stakeholders – which emerged among our entrepreneurs – is an indication of a low level of trust in the network of stakeholders, typical of an innovation ecosystem. Therefore, we have prepared a series of initiatives that would nurture the culture of entrepreneurship and ecosystems through advanced training programs and innovative teaching tools, as well as public measures that would encourage collaboration between local players aimed at developing innovation.
a) A PhD program in “Entrepreneurship and Innovation”.
The PhD in Entrepreneurship and Innovation was born thanks to the joint commitment of the Department of Business and Quantitative Studies of the University of Parthenope and the Department of Economics of the University of Campania Luigi Vanvitelli, and aims to train future researchers to become experts in the field of innovation management. (https://www.disaq.uniparthenope.it/imprenditorialita-e-in Tecnologia/)
b) Public Notice of “Measures to Strengthen the Innovative Ecosystem of the Campania Region”.
This is an allocation of 4 million euros in total by the Campania Region to universities, business incubators, research centers and manufacturing firms (max € 200,000 per beneficiary) to support animation and scouting operations, idea generation and business acceleration aimed at strengthening the entrepreneurial capacity of Campania.
c) Observatory on Local Innovation Systems “SLIOB”.
This is the first Italian observatory dedicated to the study and monitoring of innovation ecosystems, founded by DISAQ of the Parthenope University of Naples. The Observatory aims to promote the creation and transfer of knowledge on innovation ecosystems through both traditional methods (reports, scientific publications and events) and innovative Massive Open Online Courses (MOOCs), business games and workshops. (https://www.disaq.uniparthenope.it/sliob)
d) UNESCO Chair of “Innovation and Entrepreneurship Ecosystems in the Mediterranean and MENA Countries”.
Based on the expertise in innovation ecosystems developed in recent years, the Parthenope Group has promoted a UNESCO Chair with the scope of providing advanced training courses, support activities and specific workshops aimed at creating the conditions and capacities necessary for the creation of innovation ecosystems in the countries of the MENA (Middle East and North Africa) area.
e) The Entrepreneurial Ecosystem Game (TEEG).
DISAQ has developed a virtual business game in which players play the role of policy makers in the context of an entrepreneurial ecosystem. The simulation explores the dynamics of an entrepreneurial ecosystem that aims to establish conditions for the creation and long-term survival of startups through three different types of tools: analytical tools, meta-organizational tools and intervention policies.
f) Massive Open Online Courses (MOOCs) on Entrepreneurship.
These consist of online training courses (lasting 3 weeks), provided by DISAQ, on the subject of entrepreneurship. The courses explore all the stages of the startup generation process from idea development to market entry. The course is based on Design Thinking methodology and can be attended for free by both Parthenope and external students.
Pillar 4. Development of an innovative blue economy pole.
Naples is the second Italian city in terms of number of companies engaged in the blue economy sector (16,564), and is home to major players in the sector at an international level (e.g. Grimaldi, MSC , Marnavi) (Economic observatory of the region of Campania, 2017). Furthermore, more than half of the maritime economy’s youngest enterprises are concentrated in the South, and Campania has been chosen as the seat of the “National Blue Italian Growth Technology Cluster.” Finally, in 2018 the first “Observatory for Blue Economy,” which involved numerous academic, entrepreneurial and associative bodies, was established with the aim of developing common solutions and initiatives to enhance the sea economy.
The goal is to systematize elements of regional sector specialization, and Parthenope University (historically linked to the region’s maritime industrial tradition) has a leading role. We are working on developing a sub-regional cluster on the blue economy for implementing innovative projects through the creation of a network of major players in the area, innovative startups in the blue tech sector and relevant academic departments.
a) The Development of a Smart Bay in Naples.
This is a long-term plan that aims to seed the development of a Blue Tech cluster starting with the conversion of a former industrial area of Naples into an area for innovative startups operating in the Blue Tech sector. Initially, the project will leverage the involvement of large companies in the sector, with an initial investment of approximately 10 million euros through a National Development Agreement. The Smart Bay Project was recently included among the priorities of the National Research Plan. Its aim is to create a pole of excellence in Campania for Blue Sector research and development projects.
b) Smart Bay Steering Committee.
A steering committee for managing and monitoring development activities for the Smart Bay is soon to be established. The Steering Committee will be a technical-political body composed of port authorities, ship owners and entrepreneurs in the sector, as well as academic experts in maritime economics.
Conclusion
The management, implementation and monitoring of the strategic plan for the development of the Campania ecosystem will be entrusted to the Project Measures Implementation Committee (CAMP), which is composed of the members of Team Campania who participated in MIT REAP. CAMP was born not only from operational necessities, but above all from the team members’ determination to carry on the common vision of change that we have developed over the last two years thanks to MIT REAP. The strategic plan, as detailed in the previous pages, is the result of a long process of reflection and lessons we have learned along the way.
The first lesson we learned is about the role of regional government. Through the assiduous work done with Valeria Fascione, Regional Minister for Startups, Innovation, and Internationalization for Campania Region, we have witnessed a change in the role of the regional government from an entity that works for businesses to an entity that works with businesses. We have witnessed work by the regional government that is not limited to the allocation of funds for the start-up of startups, but which, if necessary, transforms itself into a consultant or intermediary (among startups, large companies and investment funds), so that businesses, once started, find a real response in the market.
The second lesson we have learned concerns the role of the universities in the region. In a context in which academic career evaluation indicators reward individual research performance, and in which research efforts are often aimed only at scientific publication, we have rediscovered how much direct commitment to the region and collaboration with diverse players can fill our research with meaning and validate modus operandi in other spheres within the sectors of our competence.
Finally, we have fully appreciated the value of relationships on both local and international levels. Often, the innovation potential of our companies has been held back by a lack of visibility on investment and demand channels. In addition, companies have been held back by a lack of capability to manage their own potential – an ability that can only be assimilated through consultation with experienced managers and with exposure to ambitious opportunities, attainable through inclusion in certain networks. The drafting of our strategic plan reflects these (and other) lessons learned during discussions with MIT, and discussions among the members of the team itself: a team of individuals with different objectives but united by the passion and pride for our region.
The Authors:
Marco Ferretti is full Professor of Corporate Strategy and Entrepreneurship in the Department of Business and Quantitative Studies (DISAQ) at the University of Naples Parthenope, where he is also a director of administration. He was a visiting scientist and visiting professor at MIT’s Sloan School of Management,
the University of Castilla la Mancha, and the University of Vilnius. In 2020, upon appointment by the Ministry of University and Research, he assumed the national coordination for drafting the “marine resources” section of the Italian National Research Plan 2020-2027.
Since 2018, he has been the DISAQ head of the Ministry of Education and University and Research (MIUR) “Departments of Excellence.” In the same year, he became the representative for Campania, Italy, in the Massachusetts Institute of Technology’s Regional Entrepreneurship Acceleration Program (MIT REAP). Since 2013, he has been president of the MAR.TE. Sea-Land Logistics Consortium (MAR.TE.Scarl) and was a member of the founding committee and management committee of the
Italian National Blue Growth Cluster. He is the author of over 100 scientific articles published in leading journals. He has also authored international scientific studies and books that investigate the themes of innovation strategy, local systems of innovation and the sea economy.
Eva Panetti is a Researcher in Management at the Department of Business and Quantitative Studies at the University of Naples Parthenope, where she teaches a course on Innovation and Business Design. In 2020, she was awarded the Guido Dorso Prize for the “Innovation and Entrepreneurship in Campania” project sponsored by the Senate of the Italian Republic. Since 2019, she has been a Visiting Professor at the University of Vilnius (Lithuania), offering a course on Global Business Strategy, and Project Manager for the Campania Region for the Massachusetts Institute of Technology’s Regional Entrepreneurship Acceleration Program (MIT REAP). In 2017, she was a visiting scholar at the MIT Industrial Performance Center. She is the author of numerous publications on innovation ecosystems, university-business relations, entrepreneurship, regional innovation strategies and transfer technology. She is also author of the book “The Dynamics of Local Innovation Systems” (2019), published by Routledge.
The original article is available at Politica Meridionalista.
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