Technological relatedness and innovation geography: A patent-based analysis beyond industrial districts

We examine whether Italy's innovation capacity remains concentrated in traditional Industrial Districts or is increasingly shifting beyond their historical boundaries, using analytical tools from complexity science. We focus on the technological profiles and patenting activity of 6145 Italian firms that filed at least one patent between 2021 and 2023. Using patent data from Orbis Intellectual Property, we construct an integrated firm–technology–territory dataset and apply the Economic Fitness and Complexity framework to quantify and compare firms' innovative capabilities within and outside Industrial Districts. To reveal technological relatedness, we compute a proximity metric based on the co-occurrence of 4-digit IPC codes in firms’ patent portfolios. This builds a weighted firm–firm network, which we analyze with the Louvain community detection algorithm to identify groups of technologically similar firms and examine their alignment with Industrial District boundaries. Our findings reveal a dual configuration of the Italian innovation landscape: Industrial Districts remain active hubs of technological development, but firms outside these areas consistently exhibit higher fitness levels and are more involved in complex technological domains. In particular, metropolitan areas such as Milan, Rome, Turin, and Bologna are now prominent as centres of high-fitness firms, leveraging dense knowledge networks and advanced infrastructures. Community detection analysis shows that technological clusters often extend beyond traditional Industrial District boundaries. These results suggest that advanced innovation capacity is now distributed more widely across Italy, especially in major cities, rather than confined to Industrial Districts. Taken together, these results suggest that, while Industrial Districts still play a role in Italy's innovation system, they do not appear to be the exclusive or primary centres of technological advancement in the 2021–2023 period. Instead, technologically advanced firms and activities are increasingly found beyond their boundaries, particularly in metropolitan areas, reflecting a broader, more dynamic geography of innovation.