Designing performance-based incentives for innovation intermediaries

Designing performance-based incentives for innovation intermediaries: evidence from regional innovation poles

by Margherita Russo,  Annalisa Caloffi, Riccardo Righi and Federica Rossi

in Geography, Open Innovation, Diversity and Entrepreneurship (I. Bernard ed.)  2017, pp. 289 -308 ISBN: 978-91-87531-39-2
CIMR WP34

Abstract
A growing number of innovation policies provide funding for innovation intermediaries, with the aim to remedy some of the system failures that occur within local, regional and national innovation systems. In order to induce innovation intermediaries to behave in accordance with the policies’ objectives, public funding is often conditioned on their attainment of minimum performance targets measured through indicators, whose design is therefore crucial for the policies’ success. Focusing on the case of a regional policy programme in Italy, the paper shows that policymakers’ choice of performance indicators that were only loosely tied to the policy’s objectives, prompted intermediaries to adopt behaviours that were misaligned with those objectives. The paper then presents a reflection on how to design performance indicators that encourage intermediaries to most appropriately address relevant failures in their innovation systems.