A Local innovation system is a spatial concentration of firms (including specialized suppliers of equipment and services and customers) and associated non-market institutions (universities, research institutes, training institutions, standard-setting bodies, local trade associations, regulatory agencies, technology transfer agencies, business associations, relevant government agencies and departments, et al.) that combine to create new products and/or services in specific lines of business.
A growing body of evidence suggests that there is something distinctive and systemic about innovation as a localized phenomenon, in which physical proximity, repeated transactions, and shared history and outlook combine to produce outcomes which cannot be predicted by the more familiar national innovation systems framework.