Sir Isaac Newton famously popularized the notion of standing on the shoulders of all those who went before him when making his groundbreaking discoveries. This notion of knowledge and innovation being a fluid process whereby ideas are combined and built upon is now widely understood.
Research from the University of Illinois explores how knowledge can flow between sectors and regions, underpinning innovation and creativity as it goes, as well as the economic growth that flows from that knowledge.
“Our work provides a sort of cooking recipe for patent creation, with a list of ingredients that vary by industrial sector,” the researchers say. “Some sectors depend very much on local input factors, such as the presence of a university, versus elements located further away, such as spending in R&D by another private company. In some cases, this type of collaboration takes place across companies located thousands of miles apart as virtual meetings increasingly have replaced face-to-face meetings.”
Charting knowledge flows
Often when we think of the flow of knowledge, we’ve thought of it in terms of geographical proximity, with clusters in areas like Boston and Silicon Valley cited as perfect examples. These clusters help to facilitate the kind of informal network and face-to-face interactions that have long been viewed as vital to effective innovation.
While geographic proximity still matters, and the Allen curve still generally holds true, innovation may also be shared across greater distance, with location therefore not as important as it once was.
“We wanted to see the importance of geography for the patterns of knowledge creation in specific industries. We also wanted to examine how information flows across similar or different industries. Finally, we look at spillovers from private and university research and development activities,” the researchers explain.
Knowledge transfer
They mapped knowledge transfers between five industries over 850 U.S. counties, including electronic, mechanical, drugs and medical, and computer and communication sectors. The researchers utilized patent application as a proxy for innovation and knowledge creation, and were able to track the flow of patents based upon their city of creation through to where they were cited.
The results showed that the local environment remained important across all sectors. This included the industry structure in the area, the presence of a university, the size of firms, and so on. Given the right conditions, all sectors were able to benefit in terms of their innovation output.
At least that was the general picture, for specifics were also found to vary by sector and the researchers believe this provides a more complete picture of the way sectors interact.
“While university research matters for all the sectors, there is large heterogeneity here as well,” the authors explain. “For example, it matters more for the chemical industry and the drugs and medical industry; those sectors really benefit from basic research.
“Universities provide the core research that is needed for the chemical industry to work. Unlike perhaps the mechanical or electric industries, the chemical industry relies more on faculty scholars who are looking at basic processes,” they add.
Fueling innovation
The researchers believe that their findings can help companies understand where to locate their business if they want to support and facilitate innovation.
“The main takeaway from the paper is that we should not only look at local spillovers. We should look at knowledge that comes from further away, and from other industries,” they explain. “New ideas don’t come only by looking at what has been done in one’s field, but also from looking at the broader picture and how we can combine different types of knowledge to create something new.”
They also hope that their findings might help to inform policy makers when they attempt to encourage innovation at both a local and a national level.
“We need to move away from an approach whereby everything is driven by similar mechanisms and instead understand much better what really works for one industry might be quite different from what works for another industry. It’s not just about promoting industry clusters; it’s more complicated than that. When governments try to promote innovation, they need to define a strategy that works for a specific industry and a specific location,” they conclude.
