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The effect of regional social capital and external knowledge acquisition on process and product innovation

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  • Keld Laursen
  • Francesca Masciarelli

Abstract

To introduce new products and processes, firms often need to acquire knowledge developed in other firms and organizations. Drawing on social capital and transaction cost theory, we argue that not only is the success of such acquisitions for the development of product and product innovations dependent on strategic and economic variables, it may also be contingent on the social capital available in the geographical area in which the firm is located. Combining data on social capital at the level of 21 regions with a large scale data set on innovative activities by a representative sample of 2464 Italian manufacturing firms, we find that — after controlling for a large set of firm characteristics and regional variables — being located in regions characterized by high level of social interaction leads to a higher propensity to innovate. Moreover, being located in an area characterized by a high degree of social interaction positively moderates the effectiveness of externally acquired R&D on innovation inclination. Key words: social capital; external acquisition; process innovation; product innovation.

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Bibliographic Info

Paper provided by Department of Computer and Management Sciences, University of Trento, Italy in its series ROCK Working Papers with number 043.

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Length: 32 pages
Date of creation: Sep 2007
Date of revision: 12 Jun 2008
Handle: RePEc:trt:rockwp:043

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Related research

Keywords: social capital; external acquisition; process innovation; product innovation;

References

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