Globalization and Communication Technologies and the Role of Small Firms in Innovation

Abstract

Globalization and the telecommunications revolution have brought two developments that were largely unanticipated. The first is the (re-)emergence of the importance of regions and geographic proximity as important units of economic activity. That innovative activity has become more important is not surprising. What was perhaps less anticipated is that much of the innovative activity is less associated with footloose multinational corporations and more associated with high-tech innovative regional clusters, such as Silicon Valley, Research Triangle, and Route 128. Only a few years ago the conventional wisdom predicted that globalization would render the demise of the region as a meaningful unit of economic analysis. Yet the obsession of policymakers around the globe to “create the next Silicon Valley” reveals the increased importance of geographic proximity and regional agglomerations.KeywordsSmall FirmComparative AdvantageTacit KnowledgeEconomic KnowledgeKnowledge SpilloverThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.