The effect of external knowledge sources and their geography on innovation in Knowledge Intensive Business Services (KIBS) SMEs; some Implications for de-industrialized regions in the UK

The paper explores the effect of external knowledge sources and their geography on innovation activity in small Knowledge Intensive Business Services (KIBS). It draws on results from a survey conducted in 2010 of 342 small and medium (SME) KIBS in the UK’s, North East and West Midlands. It is shown that innovation is supported by knowledge gained from frequent interaction with regional and UK customers as well as more frequent interaction with local business networks, including informal contacts as well as national licensing arrangements, regional and UK commercial networks and UK public and professional infrastructure. Innovation capability is also enhanced by internationalisation through both traded and untraded relationships. Various industry-specific business networks and regional government agencies also act as important sources of knowledge and networking in de-industrialised regions. No support is found for benefits arising from the clustering of firms in similar line of business or with regional universities or public sector organisations. Also, while we acknowledge positive effect of R&D on KIBS innovativeness we argue that its' effect is much less important compared to regional and extra regional knowledge sources

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CIMR Research Working Paper Series, Working Paper No. 18/2014
Series ISSN: 2052-062X