Abstract
Do informal social ties connecting inventors across distant places promote knowledge flows between them? To measure informal ties, we use a new and direct index of social connectedness of regions based on aggregate Facebook friendships. We use a well-established identification strategy that relies on matching inventor citations with citations from examiners. Moreover, we isolate the specific effect of informal connections, above and beyond formal professional ties (co-inventor networks) and geographic proximity. We identify a significant and robust effect of informal ties on patent citations. Further, we find that the effect of geographic proximity on knowledge flows is entirely explained by informal social ties and professional networks. We also show that the effect of informal social ties on knowledge flows is greater for new entrepreneurs or ‘garage inventors’, for older or ‘forgotten’ patents, and for flows across distant technology fields. It has also become increasingly important over the last two decades.
Highlights
Do inventors learn from the informal context that surrounds them? This paper empirically examines the role of social connectedness in the diffusion of knowledge among agents located across distant geographies
With respect to fixed effects, note that other than the previously mentioned omitted variable concerns, county dummies allow to account for the fact that larger county pairs naturally display higher social connectedness.28 that examiners tend to draw citations from the social network of applicants rather than their own, confirming the orthogonality requirement discussed above. 28Their inclusion equals to controlling for the natural logarithm of the product of each county’s population, which combined with the logarithm of the Social Connectedness Index (SCI) mimics a measure of logged relative probability of friendship (Bailey et al, 2018b) giving the number of existing connections over the number of total possible connections between two regions
This paper explored the role of informal social interaction, defined in terms of social connectedness, in the transfer of knowledge as captured by patent citation data
Summary
This paper empirically examines the role of social connectedness in the diffusion of knowledge among agents located across distant geographies. The research question we address, is whether stronger informal social ties to other places can foster knowledge exchange with these places, above and beyond what would be explained by professional channels or by simple geographic proximity. Citations provide a powerful measure of economically relevant knowledge exchange, otherwise difficult to observe in different settings. They speak to the process of innovation and technological change, which is a key determinant of long run economic growth (Romer, 1986, 1990; Lucas, 1988; Aghion and Howitt, 1992)
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