Innovation, Knowledge Spillovers and High-Tech Services in European Regions

Abstract

Regions rely not only on their own efforts and characteristics but also on their capacity to attract and assimilate knowledge produced elsewhere to innovate. In other words, interactions among individuals, firms and institutions produce the transmission of knowledge in the form of knowledge spillovers. In the case of knowledge-intensive business services (KIBS), one of their main features is their capacity to adapt and disseminate tacit knowledge. Despite a variety of recent studies have contributed to improve one´s understanding of the tacit knowledge diffuser role of KIBS, there has been little investigation on the spatial effects related to the presence of KIBS. This article represents an attempt to combine in one model knowledge spillovers and availability of a group of KIBS, those called high-tech services (HTS). The objective is to shed some light on the role of both geographical and technological distance in the knowledge diffusion process and to show how HTS account for a significant part of the regional innovation process using an extended knowledge production function (KPF) framework applied to 240 European regions from 23 countries. Two major findings of this analysis are following. For one part, inter-regional knowledge flows are key elements for explaining regional innovation performance, although technological proximity is far less important than geographical proximity. For the other part, regions with a higher specialization in HTS, or proximate to regions with a higher presence of HTS, tend to innovate more, mainly because HTS can improve their capacity to transform knowledge into innovation. DOI: http://dx.doi.org/10.5755/j01.ee.25.1.3207