Innovation flows across regions and sectors in complex ways, study finds
Knowledge creation – the generation of new ideas and patents – is an important driver of economic growth. Understanding how knowledge moves across industry sectors and regions can inform research and development (R&D) efforts, promote university-industry partnerships for innovation, and impact location decisions for private companies. A new study from the University of Illinois in collaboration with Stockholm University and the Korea Labor Institute provides in-depth insight into the flow of knowledge in five industry sectors across the United States.
“Our work provides a sort of recipe for patent creation, with a list of ingredients that varies across industry sectors,” says Sandy Dall’erba, a professor in the Department of Agricultural and Consumer Economics (ACE) and Director of the Climate Center. , Regional, Environmental and Trade Economics (CREATE) at U of I. Dall’erba is a co-author of the study.
“Some sectors are very dependent on local entry factors, such as the presence of a university, compared to elements located further away, such as the R&D expenditure of another private company. In some cases, this type of collaboration is product between companies located thousands of miles apart, as virtual meetings have increasingly replaced face-to-face meetings,” says Dall’erba.
“In addition, our research measures the extent to which innovation in a sector depends on R&D in the same sector or other sectors. For example, new patents in the pharmaceutical and medical industry depend on local and distant R&D in the chemical industry.
Traditionally, geographic proximity was considered essential for knowledge flows. Clusters such as Silicon Valley’s high-tech industry or Detroit’s auto industry facilitate face-to-face interactions and informal networking. Economists now recognize that innovations can be shared over greater distances, but most studies have looked at aggregate results rather than location- and industry-specific patterns.
“We wanted to see the importance of geography for patterns of knowledge creation in specific industries. We also wanted to look at how information flows across similar or different industries. Finally, we look at the impact of research and development activities institutions and universities,” said lead author Orsa Kekezi, a researcher at the Swedish Institute for Social Research at Stockholm University. Kekezi began working on this research while a visiting scholar at Illinois.
The researchers analyzed knowledge transfers in 853 metropolitan counties across the United States across five manufacturing industries: chemical, pharmaceutical and medical, mechanical, computer and communication, and electrical and electronics.
The study uses patent applications as a proxy for knowledge creation, tracking the flow from where patents are created to where they are cited (based on data from the US Patent and Trade Office). This measures the directionality of innovation and identifies the role of external factors in knowledge production.
Central to the analysis are intra- and cross-sectoral knowledge spillovers, as well as intra- and inter-regional flows, defined as local (within a county), short-range (neighboring counties within 50 miles) and the rest of the United States. (beyond 50 miles). The researchers also looked at the presence of academic and private research and development, as well as other factors, such as the number of graduate degree holders and industrial diversity in a county.
“Overall, the local environment is very important for all sectors. The structure of industry in the region, the size of firms, whether or not there is a university — these are all important for innovation. All sectors benefit from the local environment,” says Kekezi. .
But the specifics vary according to the sectors and give a complex picture of the interactions. There is no one-size-fits-all approach to patent development, and if you look at the average results, you’ll miss the intricate details and patterns across sectors and regions.
“While academic research is important for all sectors, there is also great heterogeneity,” says study co-author Dongwoo Kang, a researcher at the Korea Labor Institute, South Korea. “For example, it is more important for the chemical industry and the pharmaceutical and medical industry; these sectors really benefit from basic research.
“Universities provide the basic research needed to run the chemical industry. Unlike perhaps the mechanical or electrical industries, the chemical industry relies more on academics who study basic processes,” he adds. he.
Cross-regional spillovers matter less in the chemical industry, so direct contact is important. On the other hand, for the pharmaceutical and medical industry, cross-industry and long-distance regional spillovers are important, so geographic proximity is not as necessary. And for the electrical and electronics industry, short-distance cross-industry spillovers play an important role.
The results of the study can help companies decide where to locate their establishments.
“The idea that a company values proximity to a university, or where research and development is already taking place, is still true. But we also show that the innovation network is not completely local” , says Dall’erba.
“The main takeaway from the article is that we shouldn’t just be looking at local spillovers. We should be looking at knowledge that comes from further afield and from other industries,” Kekezi notes. “New ideas don’t just come from looking at what has been done in one’s field, but also from looking at the bigger picture and how we can combine different kinds of knowledge to create something new.”
The development of COVID-19 vaccines serves as an example, Kang adds.
“The United States has invested a lot of money in research and development to drive innovation in creating the first vaccines against COVID-19. This is usually done through a central cluster that serves as the base to innovation. But there are also other networks that are making new vaccines against COVID-19. 19 vaccines. Our findings imply that not only local activities, but also research and development in other places are important for making new vaccines against COVID-19,” he explains.
The results can also help improve the design of future local and national innovation policies.
“We need to move away from an approach where everything is driven by similar mechanisms and instead understand much better what really works for one industry can be very different from what works for another industry. not just to promote industrial clusters; it’s more complicated than When governments try to promote innovation, they have to define a strategy that works for a specific industry and a specific place,” says Dall’erba.