Radical innovations in clusters: the role of cluster internal and external relationships

Spurred by their outstanding economic opportunities, radical innovations, emerging from the recombination of former unconnected knowledge, have received increasing attention by policy makers and researchers alike. To support innovations in general, policy makers have mainly focussed on fostering the interaction within regional clusters, thereby assuming that localisation externalities only function efficiently on short geographical distances. By implementing cross-cluster as well as internationalisation measures, only recently efforts were undertaken to move beyond the geographical boundaries of clusters. While the importance of extra-local knowledge on innovativeness in general has already been highlighted, it remains unclear whether this holds also true for innovations that are rather radical in nature. Thus, we lack knowledge about which type of relationship is particularly promoting the emergence of radical innovations in regional clusters. In order to address this research gap empirically, we apply a quantitative approach on the firm-level and combine several data sources (e.g. AMADEUS, PATSTAT, German subsidy catalogue). Our results provide evidence for the stimulating effect of cluster external relationships as well as for the assumed benefits of cross-cluster relationships. By further differentiating the types of relationships according to the geographical and thematic characteristics, it can for instance be additionally determined that firms having cross-cluster relationships with thematically and regional different partners are most likely to create radical innovations. Our findings emphasize the promising potential of cross-cluster initiatives and the need to adjust the composition of these relationships according to different thematic and geographic backgrounds of the corresponding collaboration partners.