The effect of proximity between universities and research institutes and firms on firm innovativeness

Abstract

ABSTRACTInnovativeness is generally considered as a prerequisite for a firm’s success and survival in a competitive business environment. The proximity between a firm and its knowledge source is often seen as an important contributor to the firm’s innovativeness, but proximity is multidimensional and involves much more than mere geographical proximity, particularly in the internet era. This paper examines the direct and indirect effects of multidimensional proximity between firms and universities/research institutes on firm innovativeness in a weak National Innovation System (NIS) country by considering knowledge interaction as a mediating variable. In order to test the hypotheses, structural equation modelling is performed on data collected from innovative firms in Thailand. The results indicate that the organizational proximity and technological proximity between firms and their university/research institute partners play an indirect role in enhancing the innovativeness of firms through knowledge interactions. The results have significant policy and managerial implications.