Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy

No 2018/9: The Virtual is Reality! On Physical and Virtual Space in Software Firms’ Knowledge Formation

Heidi Wiig Aslesen (), Roman Martin () and Stefania Sardo ()
Additional contact information
Heidi Wiig Aslesen: BI Norwegian Business School, Postal: Norway
Roman Martin: Gothenburg University, Postal: Sweden
Stefania Sardo: BI Norwegian Business School, Postal: Norway

Abstract: To understand how knowledge is created, it is necessary to unwrap the role played by the physical and virtual spaces in knowledge exchange and formation. The extant research offers interesting findings when it comes to the relationships among regional institutional and organizational characteristics, innovation, and firms’ abilities to link up to global knowledge sources. A focus on the role of informal and low-cost mechanisms, both regional and global, has extended our understanding of their role in knowledge formation. However, the physical space has dominated the discussion in the literature on sources of knowledge formation, while the virtual space has seldom been addressed. The inclusion of the virtual space, both as an interaction space and as a different and complementary dimension, makes it possible to gain new insights into knowledge formation in a digitalizing world. Based on in-depth interviews with small and medium-sized software companies in two urban agglomerations in Norway and Sweden, this paper explores the use of physical and virtual spaces. The findings show that these spaces interact and mutually influence each other. The world is not ‘flattening’ due to ongoing digitalization. Rather, urban agglomerations are still important places in which these spaces are optimized and unified.

Keywords: virtual space; knowledge sources; geographical proximity; software firm; Norway; Sweden

JEL-codes: L86; O30; O31

26 pages, August 17, 2018

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