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Regions Matter How Regional Characteristics Affect External Knowledge Acquisition and Innovation

Author

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  • Keld Laursen
  • Francesca Masciarelli
  • Andrea Prencipe

Abstract

To introduce new products and processes, firms often acquire knowledge from other organizations. Drawing on social capital and transaction cost theory, we argue that not only is the impact of such acquisitions on the successful development of product and product innovations dependent on strategic and economic variables, it may also be contingent on the “knowledge characteristics” of 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 — after controlling for a large set of firm and regional characteristics — that being located in regions characterized by high levels of social interaction leads to a higher propensity to innovate. In addition, 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.

Suggested Citation

  • Keld Laursen & Francesca Masciarelli & Andrea Prencipe, 2007. "Regions Matter How Regional Characteristics Affect External Knowledge Acquisition and Innovation," DRUID Working Papers 07-20, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  • Handle: RePEc:aal:abbswp:07-20
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    Keywords

    Social capital; external acquisition; process innovation; product innovation;

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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