It Matters Where People Live: Innovative Collaborations and the Proximity of Inventors’ Residences

Abstract

We examine if geographic proximity of where knowledge workers live affects the likelihood that they collaborate on patents. We argue that the underlying mechanisms for why proximity in the workplace affects collaboration extend beyond the workplace. Therefore, we expect that residential proximity enhances workplace collaboration. We test this prediction by examining patenting outcomes and inventor residential location in the Warsaw Indiana orthopedic device cluster – a setting that provides many research design advantages. We find the likelihood of collaborating decreases 0.3% with each kilometer coworkers live apart. This effect is robust after controlling for other factors that might spuriously lead to this result. Documenting residential proximity as a novel within-firm agglomeration measure has the potential to explain different innovation outcomes between firms and across regions.