ABSTRACT
This chapter addresses the effect of local environments on industrial innovation processes. It examines how innovative activities are embedded not only by geographical proximity but also by technological, organizational and institutional proximity. The region-innovation link has recently been addressed by a series of theoretical discussions using concepts such as 'clusters', 'industrial districts' and 'innovative milieu'. They all point at agglomeration economies. One suggestion stemming from this literature is that increasing concentration of industry improves innovation capability because of two factors, namely linkage intensity and the availability of research and development (R&D) resources. The aim of this chapter is to find out whether the causalities are as one-dimensional as this suggestion indicates. In particular, this chapter considers the connections between the way regional industry cooperates and organises its development activities on the one hand and their access to R&D on the other hand. We examine whether the industry in large agglomerations, supported by considerable R&D resources and intensive linkages, is able to make full use of these advantages. Further we analyse whether the industry in small communities is able to compensate for their lack of local R&D resources and intensive local linkages, by integrative cooperation across branches including the use of extended networks.
