Knowledge creation and absorptive capacity: The effect of intra-district shared competences

Summary This paper takes a cross-level approach in contributing to defining the competences accumulated and shared in an industrial district, and to explaining how they differ from firm-specific, knowledge-based capacities. From a dataset of 952 Spanish firms and 35 industrial districts, we provide empirical evidence that industrial districts are spaces with dense networks of information and knowledge transfer, inter-personnel relationships and a strong specialised stock of human capital, which are accessible and shared by all firms embedded in such a district. However, we explain the complementarity between district and firm-specific capacities in order to develop the notion of absorptive capacity, by indicating that the diffusion of shared competences is neither easy nor direct and that it requires a firm's internal learning effort to better absorb localised knowledge spillovers. Results enable us to shed new light on how firms' knowledge creation and diffusion processes benefit from these external knowledge flows.