Geography Reference
In-Depth Information
proximity is required in some (but not necessarily all) dimensions to get i rms connected
and to enable interactive learning and innovation among them.
Cognitive proximity
The ef ective transfer of knowledge and collaboration requires absorptive capac-
ity to identify, interpret and exploit the new knowledge (Cohen and Levinthal, 1990;
Nooteboom, 1999, 2000). For this reason, the capacity of actors or i rms to absorb new
knowledge requires cognitive proximity. That is, their own cognitive base should be close
enough to the new knowledge in order to communicate, understand and process it suc-
cessfully. With the notion of cognitive proximity, it is meant that people or i rms sharing
the same knowledge base and expertise are expected to learn more from each other than
if cognitive distance is large. Nooteboom et al. (2007), among others, have demonstrated
that cognitive proximity is indeed an important determinant in R&D alliances. It is also
visible in patent citations, which have been considered as proxies for knowledge spillo-
vers. For instance, Breschi and Lissoni (2006) found that most patent citations occur
within the same 12 digit patent class. Studies focusing on a specii c cluster observe that
cluster i rms perform dif erent roles in knowledge networks because they dif er in cogni-
tive terms. Some i rms act as hubs, while other cluster i rms are poorly connected because
they lack the capabilities to understand and exploit external knowledge (Boschma and
Ter Wal, 2007; Giuliani and Bell, 2005; Morrison, 2008).
Organizational proximity
Boschma (2005) dei ned organizational proximity as the extent to which relations are
shared in an organizational arrangement, either within an organization, or between
organizations. It involves the rate of autonomy and control that can be exerted in organi-
zational arrangements. A continuum is assumed, ranging from one extreme of 'on the
spot' market, to informal relations between i rms (e.g. interlocking corporate boards),
to more formal organizational networks (e.g. a joint-venture, franchise), to the other
extreme of a hierarchically organized i rm (Williamson, 1985). As for cognitive proxim-
ity, organizational proximity is believed to be benei cial for establishing innovation net-
works, because they reduce uncertainty and opportunism. Strong control mechanisms
are required to ensure ownership rights and sui cient rewards for own investments in
new technology. Markets are poorly equipped to fuli l these tasks, because they tend to
generate excessive transaction costs. In addition, formal contracting is almost impossible
when it concerns complex and long-term research collaborations in which it is hard to
determine and codify what activities will be undertaken, and what kinds of return will be
generated (Nooteboom, 1999).
Social proximity
The notion of social proximity has its roots in the embeddedness literature (Granovetter,
1985; Uzzi, 1996). This literature indicates that economic relations are always embedded
in a social context and that, in turn, social relations af ect economic outcomes. Boschma
(2005) dei ned social proximity in terms of socially embedded relations between agents at
the micro-level. Relations between actors are socially embedded when they involve trust
that is based on friendship, kinship and experience through repeated interaction. Such
relationships carry information about potential partners and thereby increase the prob-
