Firms’ knowledge search and local knowledge externalities in innovation performance


We use an augmented version of the UK Innovation Surveys 4–7 to explore firm-level and local area openness externalities on firms’ innovation performance. We find strong evidence of the value of external knowledge acquisition both through interactive collaboration and non-interactive contacts such as demonstration effects, copying or reverse engineering. Levels of knowledge search activity remain well below the private optimum, however, due perhaps to informational market failures. We also find strong positive externalities of openness resulting from the intensity of local interactive knowledge search—a knowledge diffusion effect. However, there are strong negative externalities resulting from the intensity of local non-interactive knowledge search—a competition effect. Our results provide support for local initiatives to support innovation partnering and counter illegal copying or counterfeiting. We find no significant relationship between either local labour quality or employment composition and innovative outputs.

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Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School
Additional Information: © 2016 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license(
Uncontrolled Keywords: externalities of openness,innovation,local knowledge system,UK,Engineering(all),Strategy and Management,Management Science and Operations Research,Management of Technology and Innovation
Publication ISSN: 0048-7333
Last Modified: 26 Feb 2024 08:17
Date Deposited: 22 Nov 2016 09:00
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Related URLs: http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2017-02-01
Published Online Date: 2016-10-29
Accepted Date: 2016-10-17
Submitted Date: 2016-02-02
Authors: Roper, Stephen
Love, James H.
Bonner, Karen



Version: Published Version

License: Creative Commons Attribution

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