This study aims to explore the association between firm innovation capital and regional economic development, while also considering the performance of entrepreneurial innovation ecosystems. Specifically, the focus is on the Italian textile industry within the context of regional entrepreneurial innovation ecosystems, thus offering a multifaceted understanding of its historical, economic, innovative, and socio-cultural relevance. Applying a sample of 164 Italian firms in the textile industry and data from NUTS-2 regions, we carried out a dynamic panel data analysis, Generalised Method of Moments over seven years (2013-2019). By integrating firm/sector and region-level data, we aim to understand how innovative companies contribute to regional economic development when located within a vibrant entrepreneurial innovation ecosystem. The empirical evidence reveals that firm innovation capital’s role for its effects on the regional economic development is ambiguous in a low- and medium-technology sector, namely textile, yet that it is increased by the moderating effect of entrepreneurial innovation ecosystem performance. In Italy, textile sector is very important due to its contribution to regional economies and job creation effects during transition to emerging higher technology activities such as AI. A favourable entrepreneurial innovation ecosystem where firms are supported by well-established regional infrastructure, a functioning innovation system and skilled human capital can be influential to tap into unexploited benefits from innovation activities of such firms and exploit their societal impact to the most. Our results indicate that policymakers and practitioners should make more informed decisions to steer regional development by implementing specific strategies in strategically important low- and medium-technology sectors.
