46th Congress of the European Regional Science Association: "Enlargement, Southern Europe and the Mediterranean", August 30th - September 3rd, 2006, Volos, Greece
Information (the level of, and its rate of increase) is key for creation and diffusion of innovation and more so in an increasing interconnected world. Therefore, knowing how information is transform in innovation, who are the agents responsible for it and where and why is mostly going to happen are important questions to answer. Furthermore, besides dealing with the production of innovation we have to confront with its diffusion both, between firms within the same geographical proximity and between firms in different regions and nations. The result of this diffusion will be the formation of "innovation nodes" that will interact not only within them but, more significantly, with other faraway nodes. The increase in knowledge (information) have made possible to overcome geographical distant as a barrier to business engagement. The aeronautical sector will be the specific subject studied in this paper. It shows that in that sector, the creation and diffusion of innovation, and the proper organization of production, is accomplished with the combination of big firms (in an oligopoly market) and small and medium enterprises (SMS) in a more competitive market. A typology of innovation and diffusion by this hybrid method will be exposed and explained.