Scandinavian Working Papers in Economics

Working Paper Series in Economics and Institutions of Innovation,
Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

No 360: Firm Knowledge, Neighborhood Diversity and Innovation

Sofia Wixe ()
Additional contact information
Sofia Wixe: Centre for Entrepreneurship and Spatial Economics (CEnSE), Jönköping International Business School,, Postal: P.O.Box 1026, , 551 11 Jönköping, , Sweden

Abstract: This paper tests the importance of firm level knowledge and neighborhood diversity, as a source for localized knowledge spillovers, on firms propensity to innovate. Diversity is measured in terms of industries as well as employee education and occupation, of which the results show a positive neighborhood effect from diversity in education. In addition, an added positive effect from neighborhood diversity in education is found for firms with a larger share of highly educated employees, which points to the importance of absorptive capacity. However, firm characteristics, such as the knowledge of the own employees, provide to be the strongest determinants for the innovativeness of firms.

Keywords: Knowledge; neighborhood diversity; education; skills; innovation

JEL-codes: J21; J24; O31; R32

34 pages, April 3, 2014

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