Opening up the 'Jacobs Spillovers' black box: local diversity, creativity and the processes underlying new combinations

Abstract

Despite numerous attempts to isolate the respective importance of intra- and inter-industrial localized knowledge spillovers, their underlying processes have remained hidden. This article aims to provide a better theoretical understanding of the nature of inter-industrial or ‘Jacobs spillovers’ through a broad interdisciplinary literature review and additional evidence gained from a qualitative survey of Canadian inventors. The main stylized processes identified are: (i) adding to, switching or adapting specific know-how to other product lines; (ii) observing something and incorporating it in another environment; and (iii) formal or informal collaboration of individuals possessing different skills and backgrounds. Local economic diversity was found to facilitate these processes in several ways.