Regions Matter: How Localized Social Capital Affects Innovation and External Knowledge Acquisition

Keld Laursen (), Francesca Masciarelli () and Andrea Prencipe ()
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Keld Laursen: DRUID, Department of Innovation and Organizational Economics, Copenhagen Business School, 2000 Frederiksberg, Denmark
Francesca Masciarelli: Department of Management and Business Administration, University G. d'Annunzio, 65127 Pescara, Italy
Andrea Prencipe: Department of Management and Business Administration, University G. d'Annunzio, 65127 Pescara, Italy; and SPRU–Science Technology Policy Research, University of Sussex, Brighton BN1 9RH, United Kingdom

Organization Science, 2012, vol. 23, issue 1, 177-193

Abstract: To introduce new products, firms often use knowledge from other organizations. Drawing on social capital theory and the relational view of the firm, we argue that geographically localized social capital affects a firm's ability to innovate through various external channels. Combining data on social capital at the regional level, with a large-scale data set of the innovative activities of a representative sample of 2,413 Italian manufacturing firms from 21 regions, and controlling for a large set of firm and regional characteristics, we find that being located in a region characterized by a high level of social capital leads to a higher propensity to innovate. We find also that being located in an area characterized by a high degree of localized social capital is complementary to firms' investments in internal research and development (R&D) and that such a location positively moderates the effectiveness of externally acquired R&D on the propensity to innovate.

Keywords: social capital; social interaction; external R&D acquisition; internal R&D; product innovation (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (111)

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