The Contribution of Knowledge Intensive Business Services to Successful Innovation in Manufacturing Firms - The Importance of Geographical Proximity

The present paper addresses the importance of geographical location of firms in relation to processes of transfer and creation of knowledge with respect to product development, or more specific in terms of firm access to external knowledge provided by knowledge intensive service providers. The analysis shows that firms located in peripheral areas are less likely to be intensive users of collaboration in the process of product development with a broad range of knowledge intensive service providers than firms located in major urban areas, where providers of knowledge intensive services tend to cluster. However, those firms located in the periphery, which are intensive collaborators, are much more likely to have experienced employment growth subsequent to the collaboration compared to the less intensive collaborators located in the periphery. In the major urban areas no significant difference could be identified amongst the intensive and extensive collaborators.