Innovation in knowledge intensive industries: The nature and geography of knowledge links

Knowledge has become a key source of competitiveness for advanced regions and nations, indicating a transformation of capitalism towards a “knowledge economy”. Knowledge intensive sectors in production and in services have a lead in this respect, they can be considered as role models for the future. The innovation process, the mechanisms of knowledge exchange and the respective linkages in those industries differ quite markedly from those in other sectors. Clustering and local knowledge spillovers are frequently stated phenomena, although it is still unclear as to what the nature and geography of those knowledge links are. The aim of this paper is to examine the character of the innovation process and the type of interactions in those industries, in order to find out how strongly they are related to regional, national and international innovation systems. We will analyse the sources and the mechanisms of knowledge exchange and their relevance for innovation. The paper develops a typology of innovation interactions and provides empirical evidence for Austria based on data from a recent firm survey.