ArticlePDF Available


Geographical Proximity and Circulation of Knowledge Through Inter-Firm Cooperation (by Delphine Gallaud and André Torre) - ABSTRACT: The production of scientific and technological innovations has become essential for many firms, but they are seldom in possession of all the necessary knowledge. Firms have recourse to external sources, such as cooperation with other firms or public organizations of research. In this article, we try to provide some answers to the following question. What is the role played by geographical and organized proximities in the context of external acquisitions of knowledge? How can these forms of proximity be used to help solve the conflicts that emerge during of an innovation project? First, we present works on spillovers claiming the importance of geographical proximity for circulation of knowledge. Having explained the relevance of permanent and temporary geographical proximity, we then turn to a discussion of conflicts between cooperators within innovation processes. The empirical study, based on a case study of French biotechnology firms, serves to prove our hypothesis that temporary geographical proximity plays an important role in resolving conflicts between innovators.
Delphine Gallaud and André Torre
16 rue Claude BERNARD
75231 PARIS Cedex 05
in Wink R. (ed), Academia-business links, Palgrave, Macmillan, London,
1. Introduction
The production of scientific and technological innovations has become essential for many
firms, but the latter are seldom in possession of all the knowledge needed for this activity
because of the increasing complexity of knowledge bases or because R&D departments are
too small. As they do not possess internally all the skills they need, firms wishing to innovate
have recourse to external sources, such as cooperation with other firms or public
organizations of research. However, acquiring external knowledge is not sufficient; one must
also be able to use it in a specific process of production, to transform it into organizational
routines, because it is important not only to integrate this knowledge, but ideally to use it to
produce new knowledge.
This process of creation, re-creation or imitation of new resources is a complex operation that
not only necessitates several technical and organizational adaptations, but also requires
frequent relations of cooperation and partnership. The integration of new knowledge cannot
be done in one go, but progressively during the course of the innovation projects, which
implies that relations be sustained for a period of time. But the interests of the participants to
this interactive process, as well as their opinions concerning technical issues sometimes vary
Geographical Proximity and Circulation of Knowledge
or diverge. This is why cooperations are also sources of tensions and conflicts that jeopardize
the adaptation of knowledge produced somewhere else to the context of the firm or even
completely hinder the innovation process.
In this article, we try to provide some answers to the following question: What is the role
played by geographical and organized proximities in the context of these external acquisitions
of knowledge? In other words, can they help reduce the intensity of conflicts and thus facilitate
the interactive process of innovations?
The structure of this paper is as follows. First, we present shortcomings of innovation theory
and works on spillovers claiming the importance of geographical proximity for circulation of
knowledge without considering organizational prerequisites to reach this impact. Having
explained the relevance of permanent as well as temporary geographical proximity, we will
then turn to a discussion of conflicts between cooperators within innovation processes from a
theoretical as well as an empirical perspective. The empirical study is based on a case study of
French biotechnology firms and will serve to prove our hypothesis that temporary geographical
proximity play an important role in preventing and resolving conflicts between innovators.
2. The Spatial Dimension of the External Acquisition of Competencies to Innovate
Firms, wishing to innovate, rest on a knowledge base that they possess internally and/or must
obtain from their competitors, neighbors or partners (Cohen & Levinthal 1989). Studies on
districts or innovating milieus (Becattini 1990, Saxenian 1994, 2000) as well as recent
developments in the innovation theory refer to the spatial dimension in the relations of
acquisition of external knowledge, whether they are inter-firm relations or relations with
research laboratories. They postulate the beneficial effects of geographical proximity, which
would seem to be due in particular, to the possibilities offered by face-to-face (F2F) relations
between local actors, relations which facilitate the transmission of knowledge, in particular of
tacit knowledge (Lundvall 1992).
Geographical Proximity and Circulation of Knowledge
In light of recent research and applied studies carried out on the matter (Vedello 1997, Dahl et
al. 2003), this thesis needs to be seriously re-evaluated. In the following paragraphs we show
the limits of the analyses in terms of localized knowledge spillovers, before presenting recent
breakthroughs in the field of economics of proximity, in particular concerning the possibility of
moments of temporary proximity during the interactive process of innovation. We end this
section with a conclusion on the importance of relations of proximity in the process of external
acquisitions of technology.
2.1 Localized Knowledge Spillovers and Their Limits
One of the characteristics of innovation is to produce externalities. Due to the peculiar nature
of this activity that is sometimes compared to the production of a (semi) public good, the
results cannot be totally appropriated by the innovator, as part of the knowledge is diffused into
the economy without the innovator being able to prevent it, or even being aware of it. When
innovation (or R&D) is likened to information, there is a leakage of results that concerns the
overall economy, but the approach in terms of knowledge leads one to analyze the possibility
of diffusing this knowledge, as well as the geographical area it covers. From an empirical point
of view, the fact that there is a high concentration of innovative activities contradicts the
hypothesis of a complete diffusion of R&D results, which would allow activities to be equally
distributed throughout the territory. The polarization of innovative activities, which is even
greater than the production activities (Audretsch & Feldman 1996), is then often accounted for
by the characteristics of the externalities that are assumed to have a limited geographical
extension. Autant-Bernard & Massard (1999) have compiled four types of studies dedicated to
calculating the externalities of knowledge (or spillovers) and their spatial area, respectively
based on:
- the use of patents as markers of externalities (Jaffé et al 1993),
Geographical Proximity and Circulation of Knowledge
- the geographical concentration of innovations (Feldman 1994, Audretsch &
Feldman 1996),
- the geographical coincidence (Jaffé 1986, Anselin et al. 1997), and
- local interaction (Anselin et al. 1997, Wallsten 2001),
- to which one may add (Feldman 1999) knowledge incorporated in capital or
investment goods.
All these works come to the conclusion that externalities exist and that their geographical
extension is limited. This explains the concentration of firms in certain areas and supports the
idea of geographical proximity being an important factor in the diffusion of knowledge.
However, the measurement of geographical extension of localized knowledge spillovers is
still debated. Some of the above-quoted studies do not really propose an estimation of spatial
externalities: the authors use a predefined geographical area, which presupposes, but does not
prove the existence of externalities. Thus, the first three methods (patents, concentration,
coincidence) do not offer a true measurement of externalities (no calculation of the elasticity
of R&D expenditure in relation to the innovation capacity of the company of reference) and
even less of the distance they are supposed to cover. Assuming that externalities exist, they
model their effects and, in actual fact, measure agglomeration phenomena. These methods
generally postulate the role of local dimensions by using pre-defined geographical areas:
states (Jaffé 1989, Feldman 1994), metropolitan areas (Jaffé et al. 1993) and counties (Anselin
et al. 1997 in their first evaluation). Notions of distance, when they are introduced into the
gravity and coverage indicators used by these authors, are pre-defined. For instance,
according to Anselin et al (second measurement), R&D may have been carried out within a
radius of 50 or 75 miles around the county of reference.
More recent studies are making use of Geographical Information Systems (GIS) in order to
model the range of technology spillovers provide an indication for measuring distance. Thus,
Wallsten (2001) makes use of GIS to analyze the probability for a firm whose neighbors
Geographical Proximity and Circulation of Knowledge
received government support for innovation, of also benefiting from such assistance. It locates
firms without using a pre-defined geographical zone and shows that firms receiving financial
support are situated close to each other, in a radius of one tenth of a mile, often on the
periphery of urban areas. Even if these are strategic externalities linked to information rather
than R&D, and although participating in a government program is liable to introduce a
different angle, one sees nevertheless, that the distance retained, if it is not pre-defined, still
varies noticeably from one author to another (from 50 miles to one tenth of a mile), which
allows extrapolation. Finally, it was not until the publication of Orlando’s work (2000) that
distances and research externalities could be simultaneously calculated thanks to these
2.2 Geographical Proximity and Organized Proximity
Literature on the economy of proximity generally refers to two types of proximity (Gilly &
Torre 1999, Kirat & Lung 1999, Rallet & Torre 2000):
- Organized proximity lies on two types of logic, a logic of similitude and a logic of
belonging. According to the logic of belonging, actors are close when they belong
to the same space of relations (firm, network…), i.e. actors between whom
interactions of different natures take place. According to the logic of similitude,
actors are close when they are alike, i.e. when they possess the same space of
reference and share the same knowledge, so that the institutional dimension is also
- Geographical proximity refers to a great extent to the location of firms, and
integrates the social dimension of economic mechanisms, or what is sometimes
called functional distance. In other words, the reference to natural and physical
constraints is an important aspect of geographical proximity but other aspects are
equally important in its definition: the aspect of social structures such as transport
Geographical Proximity and Circulation of Knowledge
infrastructures that facilitate accessibility, or the financial mechanisms that allow
the use of certain communication technologies.
It is necessary to take this definition of geographical proximity further by distinguishing
permanent geographical proximity, which corresponds to the co-localization of firms, from
temporary geographical proximity, which lies on momentary F2F interactions enabling actors
to meet without necessarily requiring co-localization.
This type of proximity is related to a phenomenon that is currently spreading: the increasing
mobility of individuals, information and goods. Indeed the professional mobility of
individuals has increased with the development of transports (improved accessibility, increase
of speed, reduction of costs) and the technological revolution in telecommunications
(improved forms of long-distance processing and transfer of information in comparison with
the telephone era, low costs of information transfer). The complementarities of transports and
communication (the more individuals telecommute, the more they need to meet others, and
vice versa) increase this mobility, so that an increasing number of actors no longer have a
permanent workplace. But there are wider mobilities, which cross territories: the traveling of
a sales representative, the visits of a consultant auditing a firm for several days, the
participation of a researcher to a national or international congress, the temporary visit of an
engineer to the laboratory of a firm or university with which his/her firm cooperates. Thanks
to these developing mobilities, the constraint of geographical proximity can be fulfilled
temporarily through traveling without the interaction leading to the permanent co-localization
of the partners.
The need for geographical proximity is generally not permanent. It affects certain phases of
the interaction: the phase of negotiation in a transaction, the definition of the organizational
framework and guidelines of cooperation, the realization of its initial phase in the case of a
technological alliance, the necessity to share equipment in the experimental phase of a
common research project or to exchange knowledge and above all to know personally the
Geographical Proximity and Circulation of Knowledge
researchers (colloquium) belonging to a scientific community etc. Short or medium-term
visits are then sufficient for the partners to exchange – during F2F meetings – the information
needed for cooperation. As a result permanent co-localization is not necessary even for
activities, where physical interaction plays an important role in the coordination (services co-
produced by the provider and the user, knowledge-intensive activities such as innovation and
R&D activities). This is what we call the need for temporary geographical proximity.
Indeed, the possibility of moments of temporary proximity puts into question one of the most
widespread theses in the regional analysis, according to which firms have a strong tendency to
settle near one another because of frequent and repetitive interactions requiring F2F relations.
This idea can be found in particular in the research carried out in the field of innovation
geography (Feldman 1999). According to some authors firms need geographical proximity to
exchange knowledge concerning their production, commercialization, and above all R&D
activities. The thesis is based on the tacit nature of part of the knowledge, the transmission of
which requires F2F relations (learning by imitation, informal exchanges, intuitive solutions to
problems etc.) whereas codified knowledge is transmitted more easily through ICT or
physical supports (articles, books, instruction manuals etc.), which are independent from the
individuals or organizations that produced them.
This thesis must be relativized (Rallet & Torre 2000). The equation of the sharing of tacit
knowledge and geographical proximity on the one hand, and codified knowledge and long-
distance relations on the other, is indeed simplistic. Firstly, it is difficult to separate the uses
of both types of knowledge and therefore to translate them with different geographical terms.
Secondly, F2F relations, and therefore geographical proximity, are not the only possible
supports for the sharing of tacit knowledge (Freel 2002). Thanks to the collective rules and
representations that they produce, organizations offer powerful mechanisms of long-distance
coordination (or organized proximity). Thirdly, ICT also make the long-distance sharing or
co-producing of tacit knowledge possible thanks to the technological evolution of computer
Geographical Proximity and Circulation of Knowledge
sciences, which offer possibilities such as informal or visual communication (association of
the image, written support and voice) or written communication that has become close to oral
communication (e-mails, forums, chats etc.). There is no denying that F2F relations remain
indispensable for certain types of interactions (Dahl & Pedersen 2003), in particular to solve
problems related to the heterogeneity of reasoning modes or those related to the processes of
deliberation and negotiation. However, the intensity of the need for F2F relations varies
according to the phase of the process (Gallaud & Torre 2003).
2.3 External Acquisitions of Technology and Their Spatial Dimension
External acquisitions of knowledge have for a long time been considered as essential for a
firm’s production of innovation, whether the knowledge is acquired through firm-to-firm
relations or relations of an academic nature (Lundvall 1992). A firm wishing to acquire
external knowledge can get information made public through conferences, trade fares,
publications, symposia, exhibitions etc. but most knowledge it wishes to acquire is private (or
semi public) and can only be acquired from other firms or organizations. These acquisitions
range from commercial transactions (the markets of technology) to research cooperation. The
latter can be more or less formalized, whether it concerns relations with public research
organizations (contracts between universities and industries) or with other enterprises (vertical
cooperation, which corresponds to relations with clients or suppliers, and horizontal
cooperation with the competitors, the complementary firms belonging to the same sector or
other types of enterprises). In cases where knowledge is public, geographical proximity has
no impact because knowledge can be acquired wherever the innovating firm is located in
relation to the productive source of knowledge. Things are different when the information is
not divulged: it can be beneficial for the firm that seeks to acquire it to be located in the
proximity of the productive organization.
Geographical Proximity and Circulation of Knowledge
The needs for geographical proximity vary according to the type of cooperation undertaken by
a firm. The latter depends mainly on the difference between the knowledge bases of the
organizations that cooperate. The bigger the difference is between knowledge bases the more
necessary are interactions of proximity: interactions implying temporary meetings and/or a
localization of proximity.
Generally, for most cooperation projects, interactions are frequent during the phase dedicated
to the search for partners and the cooperation contract negotiations. Repeated interactions
allow the mutual evaluation of the initial competencies and resources as well as those, which
will have to be produced during the cooperation. Later on the frequency of interactions,
proximity might drop for two reasons: i) the organizations know each other better and can
therefore exchange through communication technologies, ii) the closer one gets to the
production process, the more information organizations possess internally, which limits the
needs for exchanges.
The relations between external acquisitions of knowledge and forms of proximity can be
systematically classified according to five channels generally found in literature:
- informal interactions
Considered as being the basis of the daily functioning of districts and milieus
(Becattini 1990, Camagni 1991), they, above all, enable local actors to exchange
general information and tacit knowledge, mainly through former work colleagues or
fellow students (Dahl & Pedersen 2003). Because this type of knowledge
transmission is not easily carried out when the actors are geographically distant, co-
localization or permanent geographical proximity plays an important role in this
case. As for organizing occasional meetings between geographically distant actors,
this option would precisely be outside the informal nature of the type of interactions
discussed here.
- patents and licenses
Geographical Proximity and Circulation of Knowledge
This highly codified type of knowledge transmission does not generally imply any
relation of geographical, nor even organized proximity, with the exception of
licenses of know-how which imply the obligation for the firm granting the license to
commission the installation on the site of the client firm or to train its staff. Thus
Tyres and Von Hippel (1997) have studied the purchase by firms of new machines,
the installation of which necessitates on average three trips by the engineers of the
innovating firm. The geographical proximity mobilized here, of a temporary nature,
also proves relatively limited in time.
- Industry-university cooperations (Carayol 2003) concerning research operations
Informal interactions of cooperation, often used as support to development, must be
distinguished from formal interactions. As shown above, geographical proximity is
important in the case of informal relations. Indeed the co-localization of
organizations facilitates exchanges of information concerning the techniques and
competencies available (know-who). In its permanent form, it also plays an
important role in situations where a firm makes use of university buildings and
when material and equipment are used in common by the university and the firm.
In the case of projects of formal cooperations, interactions occur during the stage of
(fundamental or applied) research. The need for geographical proximity is then only
temporary, as these interactions occur less frequently than informal interactions.
However, the bigger the difference between the knowledge bases of the
organizations and the more frequent and necessary interactions of proximity will be.
- formal interaction in the form of vertical cooperations
Cooperations within a supply chain help define the characteristics of the innovations
and therefore reduce the risk associated with the introduction of new products or
processes of production on the market (Tether 2002). Cooperations with clients,
which concern above all the stages of applied R&D, make it possible to reinforce
Geographical Proximity and Circulation of Knowledge
the adequacy between product and demand (Lundvall 1992). Defined as the lead
user, a client will help – as early as the design stage – an innovating firm to adapt its
innovation to the needs of the market. Interactions of proximity play an essential
role in this case: interactions are frequent during the stage of research but their
frequency progressively drops during the different stages of development.
Cooperations with suppliers are of two types. It is important to distinguish the
suppliers who participate to the production of the innovation from those who only
intervene at the industrial stage (at the time of mass production):
Suppliers who belong to the first category will have to adapt their
products to the demand of the innovating firm. Interactions of proximity
will therefore take place at all stages of the process, according to the
modifications of the innovation project. In this case only temporary
geographical proximity is necessary for the good progress of these
The suppliers of the second category only need to modify their products
once the R&D process is over. The interactions – less frequent than in
the previous case – occur at the stage of mass production. Here again,
only moments of temporary proximity are necessary.
- formal interactions in the form of horizontal cooperations
Three cases must be distinguished:
‘classic’ horizontal cooperations, i.e. with firms belonging to other
sectors of production, generally concern specific moments of the
research project. Permanent or temporary, geographical proximity is
used to solve development problems.
Cooperations with competitors are regulated in order to avoid the
collusion of products on the market and the formation of oligopolies.
Geographical Proximity and Circulation of Knowledge
This is why cooperation is often limited to the research stage. However,
firms try to limit the leakage of their know-how in these exchanges.
Indeed, Dahl & Pedersen (2003) show that in some clusters the work
contracts of engineers contain a clause of non-disclosure of the
information related to R&D projects to engineers of rival firms, which
limits informal interactions. Firms are in this case confronted to a
contradiction: they can choose co-localization in the hope of benefiting
from their neighbors’ knowledge while trying to limit the leakage of
information concerning their own productions. This illustrates quite well
the ambiguous nature of permanent geographical proximity. It is simpler
to set up occasional meetings in the context of cooperation contracts
during the stages of research, meetings that both limit the risks and
opportunities of obtaining external knowledge.
Cooperations with firms of the same sector with complementary
activities also occur during the stage of research but can go as far as the
setting up of prototypes. Because the division of labor is high,
interactions of proximity occur less frequently than in the case of
academic cooperation, firms trying to limit interactions to the stage
when the ‘modules’ of the innovation are assembled.
Thus, the need for geographical proximity remains relatively important in the processes of
external acquisitions of knowledge, even though temporary geographical proximity is generally
needed more than permanent proximity, and therefore the co-localization of activities of
innovation seldom seems essential. This result contrasts with theses of innovation theories,
which tend to overestimate the role of geographical proximity and to advocate the co-
localization of firms or research laboratories. Contrary to these predictions, external
Geographical Proximity and Circulation of Knowledge
acquisitions do not generally occur in the context of permanent geographical proximity but of
temporary proximity, and mainly between distant organizations, which are not situated in the
same geographical area. The division of labor enables innovators to individually carry out the
stage of production for which they possess the most competencies and to limit interactions with
other parties to the stage of assembling of the innovation. However, the density of interactions
strongly depends on the respective competencies of the firms engaged in the innovation
process, while all innovations do not require the same density of proximity interactions nor
their concentration at the same moment of the process.
3. The Introduction of the Conflictual Dimension
Innovation theories and the works on spillovers claim that permanent geographical proximity
has beneficial effects on the development of innovation at local level, because it allows a high
and regular frequency of interactions. But this idea is currently disputed. The first reason for
this refers, as mentioned above, to the important role of temporary geographical proximity in
the process of innovation. Secondly, it has also to be considered that permanent geographical
proximity produces negative effects seldom discussed in literature. In particular it is the source
of conflicts of access to scarce resources (increase of the prices of plots, access to qualified
labor) and conflicts of interests between co-localized actors (Saxenian 1994).
However, conflicts occurring during the interactive process of production of innovation do not
only concern the disadvantages of geographical proximity. They are more related to the
tensions that emerge between actors, as technical differences, interpersonal disagreements,
issues of power, property rights etc. We shall see below, based on the example of French
biotechnology firms, that geographical proximity plays a complex role in attempts to solve
conflicts. Permanent proximity enables neighboring actors to meet and have informal relations.
Temporary proximity has an important role in the prevention and resolution of conflicts
Geographical Proximity and Circulation of Knowledge
emerging during the process of production of innovations, whether they are conflicts related to
the organization of labor, to technical characteristics of the innovation or to property rights.
3.1 Economic Analyses of Conflicts
Economic analysis has dedicated little time to the study of conflictual relations because this
notion poses methodological problems, which often prove in contradiction with the core of
theoretical elaborations. The field of analysis is generally confined to conflicts of interests or
conflicts related to the distribution of wealth between actors, which excludes conflicts of
passion (which are a matter for psychology) as well as the relations of power (reserved to
political sciences).
Thus the classics have privileged the conflicts related to the distribution of wealth, thinking
that strong inequalities led to recurring revolts (and therefore to open conflicts), while the neo-
classics have focused more on the problems of conflicts of interests, proposing to solve them
by designing instruments that would enable actors to represent the gains of exchange. Later on,
Game Theory considered conflicts as a central object of analysis, its research focusing on the
determination of possible solutions and resolutions depending on whether they are cooperative
or non-cooperative games (Schmidt 2001). However, in these works, conflicts never reach the
stage of commitment behavior (verbal or physical aggression) and do not even lead – in the
non-cooperative approaches – to any communication between the actors who agree on the set
of solutions, represented by artifacts such as the matrix of gains. Even credible threats do not
go beyond ‘polite declarations’ calling for ‘rational’ reactions from the opponent, and never
degenerate into acts of violence.
Most heterodox approaches adhere to this idea of relations without serious conflicts (i.e. not
leading to acts of violence) and try above all to highlight the mechanisms of conflict
prevention, just like the School of Regulation, which emphasizes the notion of compromise
enabling the different institutional forms to build up a system (for instance the Fordist
Geographical Proximity and Circulation of Knowledge
compromise). The evolutionist approach prefers to analyze routines – defined as control
mechanisms that are sufficient to prevent conflicts, and resulting from an organizational truce
between managers and employees (Nelson & Winter 1982) – rather than explain how the
conflict is resolved. It does not deny that intra-organizational conflicts do exist – ‘it is not
however of our intention to ignore the divergence of interests between organization members’
(idem, p. 107) – and that actors can resist from automatically carrying out the task prescribed
by the firm. On the contrary, it emphasizes that employees work in the framework of ‘defacto
contracts’, which imply a certain propensity to not carry out their tasks being controlled by
the managing staff. In itself this routine activity dissuades actors from pursuing their personal
interests and keeps conflicts within limits that are bearable for firms.
Thus the economic management of conflicts concentrates generally on the search for
mechanisms of conflict prevention and resolution and neglects the relations of power between
actors as well as the conflicts concerning access to scarce resources. Only the Marxist Theory
has considered conflicts as the driving force behind economic and social change, with the
class struggle being a form of open and violent conflict between members of different social
groups, aiming to modify the distribution of wealth. The main difficulty currently consists in
producing a theory of conflict that would make it possible to take into account the
heterogeneity of actors and the fact that the latter interact in order to find solutions to
Cyert & March (1963) were among the first authors to re-introduce the notion of conflict in
the analysis of the firm, by studying conflicts between shareholders and managers, i.e.
between the owners of the firm and those who exercise their decision-making powers daily
and whose strategies are liable to affect the distribution of the value added. Other works on
management then focused on taking into account intra-organizational conflicts and something
close to the common definition: interpersonal disagreements.
Geographical Proximity and Circulation of Knowledge
A conflict is defined as a process in which one of the parties in presence feels that its interests
are opposed or negatively affected by the action of another party (Wall et al. 1995), a process,
which goes on in time and can lead to the escalation or the reduction of tensions. But authors
diverge on the identification of the very objects of a conflict, whether they are goals, values,
access to resources (Putnam & Poole 1987), needs, interests (Donohue & Kolt 1992), or
aspirations (Pruitt & Rubin 1986). The causes of conflicts found in literature also vary and
refer to individual characteristics of the different parties, difficulties or type of communication,
power-seeking behavior (Blalock 1989, Ferguson & Cooper 1987), self-fulfilling prophecies
concerning the reactions of other actors in relations to one’s own objectives, structure of
organizations or earlier interactions, as a previous conflict is likely to re-occur, especially if it
has left one party unsatisfied (Tjosvold & Chia 1989).
Nowadays, the temptation to limit conflicts is being replaced by attempts of valorization (in
particular in the case of innovation projects) in order to increase the performances of the
participants. Three main modes of conflict resolution have been observed (Wall et al 1995): i)
in some cases solutions are found by the actors themselves – possibly because the conflict has
become too expensive – with solutions ranging from compromise to the imposition of a point
of view by one of the parties, including assertion through force, ii) in other situations the
hierarchy imposes a solution, iii) in others a third party intervenes (mediation or arbitration):
some parties may hope that their gains will be higher, if they use arbitration rather than
compromise with other parties. Finally the managers might decide to wait for the conflict to
solve itself. This is the so-called solution of avoidance (Gobeli et al 1998). Innovation
situations, in particular when there is constructive interaction, facilitate the emergence of
conflicts, the participants to one same project often having partially divergent interests or
objectives that generate tensions during the process of innovation.
Geographical Proximity and Circulation of Knowledge
3.2 Conflicts in the Process of Acquiring Knowledge and Types of Proximity
One of the central limits of economic theory is that it ignores the conflicts related to the
process of production (and even more of innovation). But these conflicts sometimes cause the
failure of innovation projects, in particular when they are carried out in cooperation.
Oppositions concerning property rights for example are an important cause of failure of
technical cooperations. The mobilization of geographical and organizational proximities is an
asset in the resolution of these conflicts.
When organizations exchanging knowledge are localized in the same area, interactions can be
repeated. But when they are not, interactions are less frequent because of costs related to
traveling, which can be divided into transport costs and the time necessary to meet the other
innovators. This is why the participants to a project will then try and limit the moments of
geographical proximity, by attempting to rationalize the need for temporary geographical
proximity making F2F interactions only possible when they are necessary. Indeed, it is
important to make the distinction between:
- firms entering a sector (start-ups), who must simultaneously decide where to
locate themselves and possibly choose cooperation partners. They might find it in
their interest to locate in the proximity of other firms or organizations in order to
take advantage of a pool of qualified labor or knowledge externalities within a
single region. This case is limited – with the annual entry rate into branches being
low – and also refers to the setting up of new production or R&D units.
- firms, already localized, wanting to cooperate with other organizations in order to
innovate. These firms will not decide to re-locate in the proximity of organizations
with which they wish to cooperate due to the cost of such an operation. This is the
reason why surveys such as CIS (Freel 2002) find an important part of the relations
of cooperation occurring between firms belonging to different regions or even
different countries. The creation of a joint venture, consisting in building a new
laboratory in a location approved by all participants, is not the most used solution
because it is also deemed too expensive.
Geographical Proximity and Circulation of Knowledge
For these reasons, the process of innovation in the case of external acquisition of knowledge
often proves different from what is predicted by Innovation Theory presenting the density of
interactions and their regularity during the process as factors to explain performance of
innovation projects. Indeed studies show that participants in a project of innovation tend to
meet only once a term, and the frequency of these meetings is generally stipulated in contracts
(Gallaud 2003). The division of labor between innovating firms remains high, i.e. each firm
carries out the tasks for which it has the most competencies and the innovators meet
essentially in order to assemble the different modules and/or to manage conflicts. Thus
permanent geographical proximity is not necessarily beneficial to firms when it is associated
with the idea of co-localization. Furthermore, a firm deprives itself of its competencies,
sometimes for long periods of time, when it sends staff away. Temporary geographical
proximity makes it possible to avoid this expensive solution when firms have the capacities to
develop an innovation in common although they are not co-localized. They develop the
project by only moving some staff, mostly in the context of a formal cooperation like a
The analysis of benefits of (temporary or permanent) geographical proximity in the case of
conflicts can be listed according to the modes of resolution of conflicts emerging during the
development of innovation projects. They are first of all (Dyer & Song 1995, Gobeli et al
- avoidance, in which the project manager waits for the conflict to solve itself, at the
risk of causing the project to fail leading to separation. If innovators do not
recognize the conflicts, they will not travel to resolve it.
- the imposed solution, associated to a relatively low geographical proximity. It is not
necessary for all the participants to the project to meet when this solution is chosen.
Two cooperative solutions necessitate geographical proximity more because they require the
participants meeting in order to negotiate a compromise:
Geographical Proximity and Circulation of Knowledge
- the ‘give and take’ solution, whereby the hierarchy proposes a solution that is
acceptable for all participants concerned. It differs from mediation – which refers to
disagreements between an institution and a user more than to firms – in that one of
the parties (the hierarchy) is both judge and party and proposes concessions
elaborated with the workers. Co-localization facilitates the finding and acceptance
of this type of solution.
- the concerted solution, in which all participants meet and find, together, a mode of
resolution specific to their problems. The advantages of permanent geographical
proximity are obvious here, as it enables the parties involved to hold repeated
deliberations and negotiations and facilitates the quick mobilization of actors after
latency periods. We shall see below that temporary geographical proximity also has
But geographical proximity alone is not sufficient to solve conflicts: it is always associated to
organized proximity. The relative failure of Japanese transplants into Silicon Valley shows that
interactions are not generated by co-localization alone, but that institutional mechanisms are
necessary (integrating a network by being introduced by an actor who already belongs to it). In
other words, geographical proximity must be activated by organized proximity (Filippi & Torre
2003). The studies carried out on ‘epistemic’ communities (Steimueller 2000) also reveal the
importance of standards, rules and a common culture, which enables actors to interact. These
factors correspond to what we understand by organized proximity, defined by a certain degree
of likeness between actors (see section 2).
While standard theories highlight the mechanisms of conflict resolution by making the
hypothesis that actors agree on the set of solutions, the treatment of conflicts in innovation
projects consists for the actors in building a common space, which contains the (temporary or
definitive) solution to the conflict as well as the common rules, which will enable them to
debate and possibly reach a compromise. The practical cases of innovation projects show that
Geographical Proximity and Circulation of Knowledge
the innovators solve conflicts of representation when they have built a common language
(Latour 1989, D’Adderio 2001), or forms of organized proximity, i.e. when they are
sufficiently similar to understand a problem in the same terms. From our point of view the role
of organized proximity varies according to the forms of conflict resolution chosen: it is nil
when the solution of avoidance is used, low when the solution is imposed, and it increases
significantly when the ‘give and take’ and concerted solutions are mobilized. Temporary
geographical proximity and organized proximity are then complementary and enable the actors
to find processes of negotiation and compromise.
3.3 Conflicts and Proximity in the Biotechnology Sector
Far from being a homogeneous and coherent sector (Porter 1990), biotechnology can be
defined as the set of techniques and knowledge related to the use of living organisms in
processes of industrial production (Ducos & Joly 1988). Biotechnology is essentially used in
chemistry, agro-chemistry, pharmaceutical and agro-food industries, and very occasionally
lead to a few applications related to the environment or the control of pollution. In France, a
production chain made of firms, which are specialized in these activities or complementary
activities, is emerging: manufacturing of specific instruments and equipment, technical
consulting and expertise, and specific modes of financing (Lhuillery 2002).
Biotechnology is characterized, generally and more specifically in France, by cooperations
between distant firms, to such an extent that firms being co-localized in scientific parks do not
appear much to cooperate locally. Distance does not seem to penalize these firms and does not
stop them from developing their projects. But this does not mean that geographical proximity
plays no role in their functioning. Indeed, although co-localization is not sought for, the
benefits of geographical proximity are mobilized, but in a temporary manner through
occasional meetings between the participants of the projects. Thus, most contracts of
cooperation concerning innovation activities make provision for at least one meeting per term
Geographical Proximity and Circulation of Knowledge
in order to examine the progression of the project. One of the objectives of these meetings is to
defuse, reduce or attempt to find solutions to conflicts that may emerge during the process of
Conflicts in biotechnology are related to property rights, to the technical content of the
cooperation (disagreements concerning the objectives and /or the technical characteristics of
the projects), or to the organization of labor and interpersonal disagreements. Problems related
to property rights are likely to increase in the coming years because approximately 50 per cent
of the patents covering the main medicines will have become public by the year 2005 (Depret
& Hamdouch 2001), which is going to increase the competition between firms and probably
the cooperation between big laboratories and start ups of biotechnology. Problems concerning
conflicts of representation are important because cooperation takes place between different
organizations, for example firms and universities. Interpersonal disagreements influence the
performances of innovation projects (Souder 1987), even if arrangements are often possible.
Thus, in cooperations with public organizations or universities, innovators emphasize the fact
that they knew the researchers with whom they now cooperate before the cooperation project
was launched. Interpersonal networks serve in this cases to reduce conflicts (Depret &
Hamdouch 2000).
In the following, we refer to a questionnaire survey of 60 biotech SME of (Gallaud 2003),
where people in charge of innovation projects have been interviewed. The innovation projects
had to have been carried out in cooperation with other firms and/or public organizations of
research. The content of the cooperation covered all forms of technical cooperation with the
exception of purchases of patents and licenses. The geographic area covered by the survey
included the regions of Alsace, Auvergne, Brittany, Ile de France, Rhône Alpes and Midi
Pyrénées. Firms localized in tscience parks as well as outside any specific group were
included. The firms surveyed privilege activities related to agriculture and the agro-food
industry. The objective of the interviews was to look for the role played by relations of
Geographical Proximity and Circulation of Knowledge
proximity in the modalities of anticipation and resolution of conflicts emerging during
processes of interaction for the external acquisition of knowledge. One of the main questions
referred to different types of conflicts experienced and whether they had been solved through
geographical proximity (with at least one trip of the innovators) or only by using different
channels of tele-communication. The central hypothesis was that the different types of conflicts
led the firms to mobilize temporary proximity with different intensities.
The results show that the types of conflicts during innovation projects in biotechnology were
related to:
- property rights of the innovation and gains drawn from future innovation. These
conflicts occur more often in cases of cooperation than for any other form of
acquisition because the knowledge does not yet exist when the contracts are signed
(incomplete due to the uncertainty of the innovation process, see the chapter by
Blum & Müller). They oppose firms and public organizations of research more
frequently; possibly because the modes of valorization of knowledge are different
and French public organizations were only authorized in 1999 to create private
valorization structure. Firms with experiences on conflicts of this type have a
higher-than-average propensity to experience once again a conflictual relation,
possibly due to a climate of distrust between participants. Temporary geographical
proximity is mobilized to resolve these conflicts, the innovators travelling
(generally between 4 and 5 times) in order to solve conflicts related to the
distribution of gains of the innovation. The relations of power and the threats will be
more effective and credible than in the case of utilizing telecommunications.
- the objectives and/or technical characteristics of the innovation. If innovators do
neither share the same knowledge nor the same ‘professional culture’, they have
different representations of the objectives or/and the technical characteristics of the
innovation (Latour 1989). It is this type of conflict inherent to any innovation
Geographical Proximity and Circulation of Knowledge
project, which geographical proximity solves the most. It is easier for innovators to
reach an agreement on the technical characteristics through F2F interactions than
through distant interactions (e-mail or telephone), probably due to problems of
translation between the different professional cultures.
- the organization of labor during the project. Conflicts of this type do not occur
frequently. Temporary geographical proximity (i.e. travelling) is seldom used with
most conflicts being managed through telecommunications. This might be due to
the fact that the organization of labor in innovation projects remains highly divided.
- interpersonal disagreements between innovators. These conflicts seem to be the
most frequently solved through telecommunication, but the results of our survey do
not enable us to draw any clear conclusion in this regard.
Thus, whereas conflicts of access to scarce resources are partly caused by permanent
geographical proximity, it is the content and the progress of the interactions themselves, which
lead to conflicts during the process of innovation. Temporary geographical proximity can help
solve these conflicts, through occasional meetings, facilitating discussions, negotiations and the
elaboration of compromise.
Biotechnology firms use most modes of external acquisition of knowledge and above all
cooperation with other firms. Most cooperation takes place between distant firms. In this case
geographical proximity is temporary (one meeting per term on average). It is often mobilized
before the projects are launched in order to solve conflicts related to property rights. On the
other hand its role appears more limited during the project. Above all, organized proximity
makes it possible to limit the conflicts related to the organization of labor and differences of
representations on the characteristics of the innovation. However it is more limited than what
literature predicts with the division of labor remaining high in cooperation projects.
Geographical Proximity and Circulation of Knowledge
4. Conclusion
Contemporary theories of innovation overestimate the positive effects of permanent
geographical proximity by considering the co-localization of organizations as a key factor of
the success of interactive processes of innovation. This article aims to examine the role played
by geographical proximity in the circulation of knowledge, by focusing on those moments of
the process, which more particularly imply its mobilization.
An examination of cooperation relations reveals that the firms involved in this type of project
use permanent geographical proximity only moderately This does not mean that geographical
proximity plays no role in the external acquisition of knowledge, as the example of French
biotechnology firms shows. Indeed, our research shows that French biotechnology firms
mobilize temporary geographical proximity in order to acquire external knowledge with the
help of cooperative projects. Moreover, although most cooperation takes place between
geographically distant organizations, temporary geographical proximity is often used before
the beginning of the project to anticipate conflicts related to property rights. It has a more
sporadic role during the course of the project, because meetings are planned from the
beginning of the operations. However, it plays a role in the resolution of conflicts, by enabling
the participants to meet occasionally, and discuss, negotiate and elaborate compromise to
solve conflicts related to the organization of labor, technical characteristics of innovation and
property rights.
Geographical Proximity and Circulation of Knowledge
Notes and references
The authors would like to thank S. Paillard for her remarks on a previous version of this
Anselin L., A. Varga & Z. Acs (1997), ‘Local geographic spillovers between university
research and high technology innovations’, Journal of Urban Economics, 42, 422-448.
Audretsch, D. & M. Feldman (1996), ‘R&D spillovers and the geography of innovation and
production’, American Economic Review, 86, 630-640.
Autant-Bernard, C. & N. Massard (1999), ‘Econométrie des externalités technologiques
locales et géographie de l’innovation: une analyse critique’, Economie Appliquée, 52,
Becattini, G. (1990), ‘The marshallian economic district as a socio economic notion’, in: F.
Pyke, G. Becattini & W. Sengenberger (eds), Industrial districts and inter firms
cooperation in Italy (Geneva).
Blalock, H.M. (1989), Power and conflict: toward a general theory (Newbury Park).
Camagni, B. (ed.; 1991), Innovation networks: spatial perspectives (London).
Carayol, N. (2003), ‘Objectives, agreements and matching in science-industry collaborations:
reassembling the pieces of the puzzle’, Research Policy, 32, 887-908.
Cohen W. & W. Levinthal (1989), ‘Innovation and learning: the two faces of R&D’, The
Economic Journal, 99, 569-596.
Cyert, G. & J. March (1963), A behavioural theory of the firm (Englewood Cliffs, NJ).
D’Adderio, L. (2001), ‘Crafting the virtual prototype: how firms integrate knowledge and
capabilities across organisational boundaries,’ Research Policy, 30, 1409-1424.
Dahl & Pedersen (2003), Knowledge flows through contact in industrial clusters: myths or
realities? (WP DRUID 03 01[On line], Url
Depret, M & A. Hamdouch (2000), ‘Pharmacie et biotech l’ère des réseaux’, Biofutur, 203,
Depret, M. & A. Hamdouch (2001), La nouvelle économie industrielle de la pharmacie
(North Holland).
Donohue, W.A. & R. Kolt (1992), Managing interpersonal conflicts (Newbury Park, Ca.).
Ducos, C. & P.B.Joly (1988), Les biotechnologies, La découverte (Repères).
Dyer, S. & M. Song (1995), ‘Innovation strategy and sanctioned conflict: a new edge in
innovation?’ Journal of Product Innovation Management, 15, 505-519.
Feldman, M.P. (1994), The geography of innovation. Economics of science, technology and
innovation (Dordrecht & London).
Feldman, M.P. (1999), ‘The new economics of innovation, spillovers and agglomeration: a
review of empirical studies’, Economics of Innovation and New Technology, 8, 5-25.
Ferguson E.A. & J. Cooper (1987), ‘When push comes to power: a test of power restoration
theory’s explanation for aggressive conflict escalation’, Basic and applied social
psychology, 8, 273-293.
Filippi, M. & A. Torre (2003), ‘Local organizations and institutions. How can geographical
proximity be activated by collective projects?’ International Journal of Technology
Management, 26, 386-400.
Freel, M. (2002), ‘Sectoral pattern of small firms innovation, networking and proximity’,
Research Policy, 32, 1-20.
Gallaud D. (2003) “Coopération et conflits dans les projets d’innovation menés en
coopération” WP, ASRDLF Congress, Lyon, September 1, 3.
Gallaud, D. & A. Torre (2003), ‘Geographical proximity and the diffusion of knowledge. The
case of SME’s in biotechnology’, in: G.Fuchs, P. Shapira & A. Koch (eds), Rethinking
Regional Innovation (Boston et al.).
Geographical Proximity and Circulation of Knowledge
Gilly, J.P. & A. Torre (1999), ‘On the analytical dimension of proximity dynamics’, Regional
Studies, 34, 169-180.
Gobeli, D, H. Koenig & I. Bechinger (1998), ‘Managing conflicts in software development
teams: a multilevel analysis’, Journal of Product Innovation Management, 15, 423-435.
Jaffé, A. (1986), ‘Technological opportunity and spillovers of R&D patents. Profits and
market value’, American Economic Review, 76, 984-1001.
Jaffé, A. (1989), ‘Real effects of academic research’, American Economic Review, 79, 957-
Jaffé, A., M. Trajtenberg & R. Henderson (1993), ‘Geographic localization of knowledge
spillovers as evidenced by patents citations’, Quarterly Journal of Economics, 577-598.
Kirat, T & Y. Lung (1999), ‘Innovation and proximity. Territories as loci of collective
learning processes’, European Urban and Regional Studies, 6, 27-38.
Latour, B. (1989), La science en action (Paris).
Lhuillery, S. (2002), Panorama des entreprises françaises de biotech (Séminaire REPERES,
Lundvall, B.A. (1992), ‘Relations entre utilisateurs and producteurs, systèmes nationaux
d'innovation et internationalisation’, in: D. Foray & C. Freeman (eds), Technologie et
Richesse des Nations, (Paris).
Nelson, R & S. Winter (1982), An evolutionary theory of economic change (Cambridge et
Orlando, M. (2000), On the importance of geographic and technological proximity for R&D
spillovers: an empirical investigation (WP Federal Reserve Bank of Kansas, Kansas
Porter, M. (1990), The competitive advantage of nation (London).
Pruitt, D.G. & J.Z. Rubin (1986), Social conflict: escalation stalemale and settlement (New
Putnam, L.L. & M.S. Poole (1987), ‘Conflict and negotiation’, in: F.M. Jablin, L.L. Putnam,
K. Roberts & L.W. Porter (eds.), Handbook of organizational communication: an
interdisciplinary perspective (Newbury Park, Ca).
Rallet A. & A. Torre (2000), ‘Is geographical proximity necessary in the innovation networks
in the era of global economy?’ GeoJournal, 49, 373-380.
Saxenian, A.L. (1994), Regional advantage: culture and competition in Silicon Valley and
Route 128, (Cambridge, MA.).
Schmidt, C. (2001), La théorie des jeux : essai d’interprétation (Paris).
Souder, W. (1987), Managing new product innovation (Lexington, MA.).
Steinmueller, W.E. (2000), ‘Does information and communication technology facilitate
codification of knowledge’, Industrial and Corporate Change, 9, 361- 376.
Tether, B.S. (2002), ‘Who co-operates for innovation, and why? An empirical analysis’,
Research Policy, 31, 947-96
Tjosvold, D. & L.C. Chia (1989), ‘Conflicts between managers and workers: the role of co-
operation and competition’, Journal of Social Psychology, 129, 235-247.
Tyres, M. & E. von Hippel (1997), ‘The situated nature of adaptative learning in
organizations’, Organization Science, 8, 71-83.
Vedello, C. (1997), ‘Science parks and university industry interaction: geographical proximity
between the agents as a driving force’, Technovation, 17, 491-502.
Wall, J.A. & R. Callister (1995), ‘Conflicts and its management’, Journal of Management, 21,
Wallsten, S. (2001), ‘An empirical test of geographic knowledge spillovers using geographic
information systems and firm-level data’, Regional Science and Urban Economics, 31,
... 1. Apply acquisition of geographic proximity types derived from Glaud and Torre (2005) ...
... Computation of Similarity Index is computed through Simple Matching Coefficient (SMC): 6 3 ...
Full-text available
Smart development is a nowadays topic. Despite the fact that sustainability has never been aptly computed, Composite Appraising Supportive Progress (CASP) is a pioneering index to assess Combined Sustainable Development Index (CSDI). Biodiversity economics is consistent with the concept of smart development in terms of CASP as: 1. Genes - Society - Universities - Students - Characterization - Supporting Institutions; 2. Species - Economy - Industries - Professors - Guides - Similarity Provisions; 3. Ecosystems - Nature - Organizations - Scientists - Assessments - Planning Management; 4. Functions - Management - Development - Governance - Guidance - Smart Procedures. ACASP is a new approach to educate economists as an opportunity to present educative, engineering, geographic and scientific views on compound procedures for smart development. The current paper is devoted to create CASP for Armenia through smart development using aforementioned biodiversity concept, which is applied to CASP capturing 3 D - Magnitudes with 6 categories each as: Society: Humans, Society Concerns, Knowledge in Practice, Space Science, Political Performances, Transport; Economy: Investment, Human Standards, Production & Consumption, Agriculture, Industry, Tourism; Environment: Land, Water, Air, Biodiversity, Energy, Landscape. The new structure of CASP is performed by means of Armenian existing uniform of proximity relations as smart development through proper governance of situations, knowledge, policies and implementations to progress the economy of Armenia. The geographic proximity types are acquired and categorized as: 1) University (U): Academy (U1); Research & Development (R&D) (U2); Onsite Performance (U3); 2) Industry (I): Industry (I1); Business (I2); Management (I3); 3) Organization (O): Private NGO (O1); Public Organization (O2); International Organization (O3); 4) Application: choice of three (3) main CASP categories within each magnitude as per categorized proximity types of University - Industry - Organization (UIO) through computation of Similarity Index and Similarity Percentage. Performance of Armenian CASP within Smart Development has an emphasis on Space Science with the next representative results as per importance: U – University, N – Nature, S4 – Space Science, O – Organization, S – Society, E6 – Tourism, I – Industry, E – Economy, N4 – Biodiversity. Recommendations are provided to construct species (β) as economy (E) or industry (I) stage through dominancy to regulate genes (α) as society (S) or university (U) stage and ecosystems (γ) as environment (N) or organization (O) stage as per aptly dispensed categories to proceed Armenian CASP.
... and Torre, 2004). According to Lundvall (1992), such face-to-face contacts are required for the exchange of tacit knowledge which is, again, a core incentive to engage in R&D cooperation. ...
... on, are not always the same, and for a co-application it is impossible to identify the firm an inventor belongs to. Hence, the applicants' addresses are used in this study for allocating the actors involved. Second, there is a problem regarding the quality of the distance in kilometers to express " easiness " in terms of exchanging tacit knowledge. Gallaud and Torre (2004) differentiate between real and functional distance. The latter means the real time which is required to initiate a face-to-face contact, while the former embodies the pure geographical distance. Although the functional distance would be a more appropriate measure as it includes aspects of social structures such as transport infrastructu ...
A key issue of different streams of economic literature is to determine the impact of certain dimensions of proximity on the cooperative behavior of actors and, thus, on interactive learning processes. This paper is a quantitative study on the impact of technological and geographical proximity on the choice of the cooperation partner. Patents that were filed for Germany in the years 1998 to 2003 are used to identify the impact of both dimensions of proximity as well as their interplay. It can be shown that an increasing proximity in either of these dimensions has an independent positive impact on the cooperation probability.
... Amongst these intangible resources, knowledge, which stems from the interaction between individuals and organizations, stands out. It is often argued that the greater the distance between agents, the more difficult it will be to transfer knowledge, especially tacit and/or contextual knowledge (Gallaud and Torre 2004;Gertler 2003). In that sense, some authors (Feldman and Massard 2002) highlight the transfer of knowledge or information to explain co-localization. ...
Full-text available
One of the constituent elements of the industrial district is the existence of local and regional institutions which offer information and support services to the firms based in the district. In addition to representing an important component of social capital, these institutions can play a key role in improving the joint operability of district firms (Parra-Requena et al. 2013). The aim of this paper is, consequently, to analyze the food industry districts and the institutions which support this industry nationally. With that aim in mind, the analysis is undertaken from a regional perspective that allows us to assess, on the one hand, the degree of proximity between districts and institutions and, on the other hand, the role played by the latter as knowledge generators. The results obtained show that, in general, the support institutions tend to be located in the vicinity of the industrial districts specialized in the aforementioned sector. It likewise becomes clear that the training offer aimed at meeting the training needs of the industry is greater in these specialized environments than in others where this production model does not prevail. Such results confirm the importance of institutions in business agglomerations shaped as industrial districts.
... One can assume that geographical proximity is most important during the early stages of a collaborative agreement. After this initial phase, the need for and frequency of faceto-face interactions is often determined by the respective knowledge bases of the participating firms (Gallaud and Torre, 2005). ...
Full-text available
(Extract) This thesis explores the processes of how firms and peripheral regions develop owing to large-scale petroleum projects (hereafter, referred to as exogenous shocks). The application of well-developed theoretical frameworks does not fully account for the idiosyncratic nature of regions, nor does the traditional scholarly approach sufficiently explore the mechanisms that affect the path trajectories of regions. Therefore, this thesis aims to provide insights and extend theory about the complex and multifaceted nature of regional development in the context of the oil and gas industry. A multilevel analysis, with firms, institutions, and public actors at the micro level and systemic structures (e.g., clusters and regional innovation systems (RISs)) at the macro level, is applied to address the overall research question of the thesis: How can an exogenous shock stimulate development processes at the micro and macro levels in peripheral regions, and what are the mechanisms that facilitate this development?
... A further step in our theoretical understanding of proximity mechanisms has been made by the French School of Proximity. Most studies in this literature (see e.g., Torre and Gilly, 1999;Gallaud and Torre, 2005;and Bouba-Olga et al., 2015, among others) are based on the notion of organized proximity as a determinant of positive externalities in regional performance. The emerging sense of collective belonging by actors benefitting from organized proximity makes people more productive, in particular, when they are interconnected in a closely knit network, sharing similar mental maps and representations and enjoying a short cognitive distance between actors (in other words, actors sharing common cultural, religious and social values). ...
Usually, knowledge spillovers (KS) are related to geographic proximity. In the present study, we measure KS on the basis of different proximity matrices, focusing on the relational, social, cognitive and technological preconditions for knowledge diffusion. In the light of previous studies on KS, we examine: (i) which types of proximity enhance or hamper knowledge flows, and (ii) whether local absorptive capacity favour such flows. Our results indicate that KS across European NUTS2 regions measured through geographic, relational, social, cognitive and technological proximity channels increase with local absorptive capacity. This finding points towards the emergence of large clusters of regions (absorptive capacity clubs) where relational, cognitive, social and technological proximity lock-in maximizes the returns to local investment in R&D.
... If we study the 'economic interrelatedness' of an industrial district/cluster, we can shift from spatial interconnections, that are defi ned by geographical proximity, to virtual connections (Galaut and Torre, 2005) related to the many external linkages of each local organisation. Thus, we interpret a 'given system' as an open system, with limiting boundary conditions between what is inside and outside our model, but with open exchanges of knowledge and resources with the world. ...
Full-text available
symbiotic' division of labour among the three districts considered: Boskoop, Pistoia and Saonara, which dates back to the international fragmentation of the value chain (Arndt and Kierzkowski, 2001). The governance of the value chain is a key connection between the individual industrial districts and the globalisation of production chains, giving rise to hierarchies of places and new linkages that reconfi gure the old territorial division of labour. Our work shows that the application of science Abstract This article focuses on the historical development of one ornamental horticulture district in the Netherlands and two in Italy. The aim is to underline the global division of labour among three districts driven by industrial district heterogeneity, uneven learning systems and a unique specialisation in production and retailing. The historical development of all the districts is very similar, but the application of science and the role of local institutions explain the evolution of the cluster in the Netherlands. Despite the lack of natural resources and unfavourable climate, high labour and energy costs, the Dutch district and the Netherlands-based horticulture industry hold a leading position. Although endowed with better natural resources, the Italian districts belong to a very weak national innovation system and are now strongly dependent on the Dutch system.
... A reconsideration of the nature of knowledge and of the problems connected to its reproduction and diffusion has increased the concern about other non-spatial dimensions of proximity relevant in promoting knowledge production and circulation (Boschma 2005; Breschi and Lissoni 2005; Knoben and Oelemans 2006; Greeve 2005). While geographic proximity is the least ambiguous concept involved (Knoben and Oerlemans 2006), its explanatory power has been reduced by the possibility that organizational and relational proximities surrogate its effects (Gallaud and Torre 2005; Torre and Rallet 2005) shows. These different dimensions of proximity should be better specified and related to one another (Boschma 2005: 62; Greeve 2005). ...
In this paper explore the relationships between rivalry and geographical proximity at the very level of contacts between individual firms. In particular, we wish to highlight the influence of geographical proximity on rival identification, on the comparison of their knowledge, and on the consequent elaboration of a strategy. In order to reproduce the interactions between firms, we made use of an agent-based model (ABM) where the strategic choices of rival firms are derived from general assumptions on competitive behavior and learning processes. Aim of the model is to investigate the co-evolution of firms' knowledge, strategies and performances. Substantial empirical evidences claim that firms located in geographical clusters are more likely to learn and innovate than isolated firms.
The current study explores the destination experiences of business travelers by focusing on their social contacts with local colleagues. By crossing out of the local “tourist environmental bubble” (TEB), as conceptualized by Erik Cohen, business travelers are expected to experience difficulties associated with the strangeness of the visited destination but to gain an authentic experience in return. Based on in-depth interviews (n = 28) and a quantitative survey (n = 231) of Israeli business travelers, this mixed-methods study confirms that the supposedly inconvenient extra-TEB experience (particularly confronting strangeness) turns out to be rewarding, and the assumed benefits of crossing out of the bubble (mainly experiencing authenticity) are limited. By focusing on business travelers, the current study provides insight into guest–host interactions and the subjective experiences of travelers who cross out the TEB, mainly with respect to the complex and multidimensional sense of authenticity.
Full-text available
This article focuses upon the historical development of three ornamental horticulture districts located in the Netherlands and in Italy. The aim of our investigation is to underline the features of a global division of labour, which is driven by the specialisation of production and retailing. Despite the lack of natural resources and unfavourable climate, the high labour and energy costs, the Dutch district and the horticulture cluster based in Netherlands hold a leading position. The historical development of the three districts is very similar, but the application of science and the role of local institutions are the explanatory factor of the evolutionary path of the cluster located in the Netherlands. The Italian districts analysed, which enjoy better endowed resources are now strongly dependent by the entire Dutch cluster.
Full-text available
The article focuses on the relationship between technological and organizational innovation, and territories. This relationship is connected to interactions between learning processes, institutions and spatial patterns of innovative activities. Starting from a conception of the economy as a learning and evolutionary process instead of a static allocative mechanism, we analyse the role of several types of proximity in innovative processes. If one considers innovation as a problem-solving oriented process, it may be analysed as grounded on non-market inter-actions, and knowledge-based. The article shows how geographical, organizational and institutional proximities relate to the operation of localized innovation systems. The institutional framework is of particular importance in this context owing to the fact that such innovation systems are grounded on collective action at a territorial level and rely upon shared patterns of behavioural and cognitive rules. The analysis of institutional proximity raises the problems of the embeddedness of interrelations between actors in a territorial framework, and the transferability of tacit knowledge. This framework is extended to the analysis of spatial patterns in the emergence and diffusion of industrial models. In our conception, the emergence of an industrial model has territorial foundations, but it is also dependent upon an institutional learning process. However, once stabilized and diffused, its relation to geography and territories evolves and transforms. We illustrate this analysis by referring to the emergence and diffusion of industrial models in the automobile industry. Finally, the framework is used to analyse the spatial effects of organizational changes in product development. These changes are both institutional and technological.
Full-text available
Since the principle that the capacity for innovation is a driving force in the growth of firms or other productive systems has been acknowledged, public policies hold to the view that geographical proximity plays a part in the process of the circulation of technology and knowledge, by fostering the kind of face to face relationships needed to establish and maintain a common pool of knowledge. The aim of this article is to question the relevance of these ideas, and enquiring as to whether geographical proximity is really needed for the diffusion and exchange of knowledge. A body of literature (local systems of production and externalities) considers permanent geographical proximity as a necessary condition for the diffusion of knowledge (I) whereas the articles dealing with transmission channels for externalities, show that geographical proximity only influences the innovative performance of firms if there is effective interaction between the agents (II). We show that organisation is the first modality in the transmission of knowledge, and that geographical proximity can be temporary, particularly in the initial phases of the R&D processes. The smaller firms are then more acutely aware to fulfil the need of de geographical proximity (III). This pattern, applied to plant biotechnology (IV), reveals that SME's related to the AFI and to agriculture are part of a less diversified and more local innovation network than pharmaceutical SME's and are more involved in frequent and repeated contacts with the clients and the suppliers.
Over the past twelve years the aim of Sweden’s Technological Systems (STS) project has been to identify the role of technology in economic growth. While the importance of technology is generally accepted, its role in the economic growth process continues to be only partially understood. The interdependencies between technological change and economic growth become particularly important when the rate and scope of technological change increase. Under these conditions there is a risk that the institutions, policies, and organizations, as well as the concepts and perceptions on which they are based, become obsolete.
With the publication of his best-selling books "Competitive Strategy (1980) and "Competitive Advantage (1985), Michael E. Porter of the Harvard Business School established himself as the world's leading authority on competitive advantage. Now, at a time when economic performance rather than military might will be the index of national strength, Porter builds on the seminal ideas of his earlier works to explore what makes a nation's firms and industries competitive in global markets and propels a whole nation's economy. In so doing, he presents a brilliant new paradigm which, in addition to its practical applications, may well supplant the 200-year-old concept of "comparative advantage" in economic analysis of international competitiveness. To write this important new work, Porter and his associates conducted in-country research in ten leading nations, closely studying the patterns of industry success as well as the company strategies and national policies that achieved it. The nations are Britain, Denmark, Germany, Italy, Japan, Korea, Singapore, Sweden, Switzerland, and the United States. The three leading industrial powers are included, as well as other nations intentionally varied in size, government policy toward industry, social philosophy, and geography. Porter's research identifies the fundamental determinants of national competitive advantage in an industry, and how they work together as a system. He explains the important phenomenon of "clustering," in which related groups of successful firms and industries emerge in one nation to gain leading positions in the world market. Among the over 100 industries examined are the German chemical and printing industries, Swisstextile equipment and pharmaceuticals, Swedish mining equipment and truck manufacturing, Italian fabric and home appliances, and American computer software and movies. Building on his theory of national advantage in industries and clusters, Porter identifies the stages of competitive development through which entire national economies advance and decline. Porter's finding are rich in implications for both firms and governments. He describes how a company can tap and extend its nation's advantages in international competition. He provides a blueprint for government policy to enhance national competitive advantage and also outlines the agendas in the years ahead for the nations studied. This is a work which will become the standard for all further discussions of global competition and the sources of the new wealth of nations.
Finally, a total management system for all aspects of the new product process, from conception to commercialization. This pragmatic book highlights the conditions and factors that guarantee new product success. It will help innovators implement their ideas and help managers turn the results into profits.