The importance of regional development, especially in rural areas, has increased in the globalized world, with a focus on the relationship between economic development and the territory.

Intellectual capital, consisting of human capital, relational capital, and structural capital, is crucial for rural development. In the agri-food sector, intellectual capital includes innovation and tradition, which are often wrongly perceived as incompatible. The impact of intellectual capital on regional development has not been widely studied, particularly in the context of the Italian agrifood sector, which has a long tradition and strong territorial heterogeneity. This paper aims to measure the impact of intellectual capital and know-how on regional development in the agricultural sector using a nonparametric efficiency methodology applied to a unique geographic area-based dataset. The study finds that innovation, measured by patents, has a better impact on efficiency than the relational component, which has an inverted U-shaped effect. Too much concentration of different consortia in the same area does not favor efficiency but results in negative externalities. In contrast, innovation has a positive effect on efficiency at any level. A synergy effect was evidenced with the coexistence of both technological innovation and certification activities. We also study how the efficiency also varies according to regional characteristics such as the location of the region in Italy (north versus Center and south), the type of the regions (urban versus rural) or the size.