Assessing the importance of proximity dimensions for the diffusion of radical innovations in German biotechnology

Abstract

This paper estimates the impact of the different proximity dimensions on the subsequent innovation performance of firms which received radical knowledge spillovers. The analysis for the case of biotechnology small- and medium-sized firms (SMEs) in Germany is based on a dataset covering the period from 1998 to 2017. Results indicate the positive impact of social and organizational proximity on the innovation performance of radical knowledge recipients. Geographical proximity has a negative impact, whereas for cognitive proximity a U-shaped relation is observed. The paper contributes to the innovation economics and economic geography literature by underlining the peculiarities of the effectiveness of radical knowledge spillovers. Additionally, the importance of policy support for SMEs across regions and technological fields is highlighted.