No 2021/1 The Role of Location on Complexity of Firms’ Innovation Outcome

Abstract

In this paper we analyze how the location of firms influences their innovation outcomes, particularly the complexity of the outcomes. Using three waves of the Community Innovation Survey in Sweden for a balanced panel of firms from 2006 to 2012, we identified a range of innovation outcome categories, i.e. simple and complex (low-, medium-, highly-complex) innovation outcomes. The backbone of such categorization is based on how firms introduce a combination of Schumpeterian types of innovations (i.e. process, product, marketing, and organizational). Then we consider three regional characteristics that may affect the innovation outcomes of firms, i.e. (i) qualified labor market thickness, (ii) knowledge-intensive services thickness, and (iii) knowledge spillovers extent. We find that regional characteristics do not affect firms’ innovation outcomes in terms of their degree of complexity ubiquitously. They are only positively associated with those firms that introduce the most complex innovation outcomes. For firms with less complex innovation outcomes, regional factors seem not to play a pivotal role. For these innovators, internal resources as well as formal collaboration with external partners have a significant role.