The strategic choices regarding innovation and research and development (R&D) policy in Portugal have, over the past two decades, produced various positive benefits, in which the regions of Lisbon and Algarve, in particular, have taken the lead. These are the only regions in Portugal which converge towards the European average growth rate with respect to gross production, investment and employment creation. It is now timely to evaluate firms’ contributions to national and regional growth, their obstacles, and impacts. After a conceptualization of innovation policy in Portugal, the present paper treats innovation as a major criterion for the policy evaluation process referred to above. Our empirical investigation aims to explain the innovation performance of Portuguese firms throughout the country, and to explore those determinants of innovation which are region-specific. Therefore, the analysis addresses a set of firms’ achievement patterns, by focusing on ways in which institutions interact in the process of innovation at the regional level. In our modelling study, we employ a new methodology, viz. the external logistic biplot method, which is applied to an extensive sample of innovative institutions in Portugal. Variables identified as crucial determinants in earlier studies are used to describe regional institutional profiles. Such profiles exhibit a great variety of ways in which these determinants are able to promote regional innovation. The creation of a Gradient of Capacity to Dynamically Innovate associated with each firm enables an analysis of the innovation gradient of each region in Portugal. Our paper presents and investigates these findings, and offers some policy lessons.
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