A multi level analysis of social capital and innovation in economic geography

This proposal concerns the relationship between social capital and innovation. Given the importance of innovation for economic development and the interest of policy makers at the Dutch (Innovatieplatform) and European (Lisbon agenda on the knowledge economy) level to boost innovation, a better understanding of the drivers of innovation is important. One aspect that both economists and economic geographers argue to be of significant importance for innovation is social capital. In their analyses of regional concentrations of innovative activity, many scholars have used concepts like clusters, industrial districts and regional systems of innovation to argue that the regional environment is of great importance for a firm?s innovativeness. These so called territorial innovation models share the common feature that non-economic factors, crystallizing around the concept of social capital, are an important element of the regional environment. Using existing data on social capital in European regions and U.S. states, I relate social capital to regional innovation patterns, thereby complementing the mainly conceptual or case-based contributions in this field. In addition to these aggregate regional analyses, I specifically address the firm-region relationship by a multi level analysis of social capital and firm level innovation data. Controlling for a number of firm specific characteristics, I test hypotheses on the relationship between social capital and a firm?s innovativeness. The added value of this research is not limited to a better understanding of how to improve the innovative performance of firms and regions. By empirically relating social capital to innovation this research builds upon and contributes to a broader methodological discussion in economic geography concerning the importance of cultural factors for regional economic success, and the role of the firm in economic geography. This innovative approach thereby pushes the research frontier in this field significantly.