Nothing is in the Air

Abstract

It has often been argued that 'there is something in the air' which makes firms in high-density environments - such as cities or clusters - more innovative. The co-location of firms facilitates the emergence of serendipity and casual encounters which promote innovation in firms. We assess this hypothesis using data from a survey of Norwegian firms engaged in innovation partnerships. The results indicate that there may be 'much less in the air' than is generally assumed in the literature. The relationships conducive to innovation by Norwegian firms emerged as a consequence of purpose-built searches and had little to do with chance, serendipity, or 'being there'.

Keywords: agglomeration, externalities, firms, innovation, Norway, spillovers, tacit knowledge

JEL Classification: O31, O33