his is a warning against generalising in the debate on the relative advantages of large and small firms. At a level of analysis above this debate, some generalisation is however possible: for both large and small firms the influence of the institutional context on innovative activity is played out on a canvas that stretches well beyond the internal culture, structure and processes of the individual firm. As Androsso-O'Callaghan and Jacobson (1997, p.6) have recently put it: the decisions, strategies and actions of any firm evolve in a specific, regional or national, technological context, affected by a whole range of private and public institutions, and by the relationship between those institutions and firms, in short by a geographically and historically specific innovation system.While the systems of innovation research is still in its relative infancy, and the literature remains underdeveloped, clear strides have been made in establishing the link between wider contextual and institutional factors and firm-level innovation and in identifying the kinds of variables involved. While the question as to which domain, local, regional, national, global or sectoral, is the most salient may itself vary with context, there is little doubt that such wider systemic influences are important. For example, the financial, technical training and education, and industrial relations sub-systems, seem to be important variables in distinguishing the effectiveness of the national systems of innovation in large countries (Androsso-O'Callaghan and Jacobson 1997). At the regional level, key variables include socio-cultural links such as common religion, artisanal training, party political membership, and strong sense of local community (Malerba 1993). Furthermore, in industrial districts like Silicon Valley, regional and sectoral influences have been found to interact to produce new structural arrangements within and between firms that affect the system of i...
