How high tech firms in small towns acquire non-local knowledge : The importance of firm and location characteristics

How multinational high tech firms in small towns acquire non-local knowledge: The importance of firm and location characteristics on innovation outside core regions Rahel Meili, University of Bern, Institute of Geography, Year of enrolment: September 2015, Expected final date: September 2018, rahel.meili@giub.unibe. ch State-of-the-art: Innovation outside core regions has received increased attention in the field of economic geography over the last couple of years. Innovation outside large urban agglomerations is seen as depending strongly on external linkages. Empirical studies have shown that firms in peripheral locations predominantly use non-market sources for information (Shearmur & Doloreux 2016), that the external sources compensate for the lack of local knowledge spill-overs (Grillitsch & Nilsson 2015) and that the open-mindedness of managers can influence the number and nature of collaborations and knowledge linkages (Fitjar & Rodr? guez-Pose 2011). Research gap: The recent literature has to be criticised for not providing insights into the mechanisms, by which firms in peripheral locations gain access to the external knowledge sources and for neglecting the influence of different firm and location characteristics on the development of non-local knowledge linkages. Furthermore, the literature does not distinguish between firms with different global reaches and uses mostly broad-brushed definitions of the periphery. Hence, this paper concentrates on multinational high tech firms (MNHTs) with headquarters and R&D departments in small towns (between 5000 and 25`000 inhabitants). It asks the following research questions: Which are the main non-local knowledge sources of MNHTs located in small towns? How do MNHTs located in small towns gain access to the central non-local knowledge sources? Which firm and location characteristics are crucial to the access to non-local knowledge sources? Theoretical argument: How firms innovate depends on the one hand on the characteristic of the firm and on the other hand, on the possibilities firms have in their location. For a better understanding of innovation processes beyond core regions it is necessary to gain knowledge about how specific types of firms gain access to the different knowledge sources and which firm and local characteristics support or hinder this knowledge-sourcing activities. Method: We used a multiple case study design with qualitative interview data (totally 28 interviews) from five MNHTs that are located in small towns in the eastern part of Switzerland. A theoretically replication by investigating two national acting, but also exporting high tech firms (NHTs), in the same region, was carried out as well. This way, differences between MNHTs and NHTs located in small towns regarding knowledge sourcing can be identified and the importance of considering different firm characteristics when talking about innovation outside core regions emphasized. Results: The study yields a number of interesting results. First, the multinationalism of a firm when talking about non-local sources of knowledge has to be considered, even in the context of small towns. Four main sources of non-local knowledge could be identified: recruitment of new national and international employees; clients, research institutions and universities; fairs, conferences and workshop. Compared to NHTs, MNHTs were better able to access and use information from clients through subsidiaries and hire international employees. We can assume that multinationalism is one important characteristic to have easy access to non-local knowledge sources and compensate for the lack of local knowledge in their hometowns. Second, a small town in a periurban-rural region is not completely peripheral. Firms in small towns have to cope with obstacles such as the missing local buzz, thin labour market as well as the lack of urban amenities, but still have good transportation connections to bigger cities and can draw on central place functions that include schools, medical care, restaurants, etc. The central place functions, lower cost of living and the natural amenities attract especially families and people older than 30. Hence, firms in small towns have other possibilities to access non-local knowledge sources than firms that are located completely in the periphery. These results show that the combination of firm and location characteristics influence how non-local sources of information can be accessed and which ones are used. Key References: Fitjar, R.D. & Rodr? guez-Pose, A. , 2011. Innovating in the Periphery: Firms, Values and Innovation in Southwest Norway. European Planning Studies, 19(4), pp.555? 574. Available at: http://www.tandfonline. com/doi/full/10.1080/09654313.2011. 548467. Grillitsch, M. & Nilsson, M. , 2015. Innovation in peripheral regions: Do collaborations compensate for a lack of local knowledge spillovers? Annals of Regional Science, 54(1), pp.299? 321. Shearmur, R. & Doloreux, D. , 2016. How open innovation processes vary between urban and remote environments: slow innovators, market-sourced information and frequency of interaction. Entrepreneurship & Regional Development, 28(5-6), pp.337-357 Available at: http://dx.doi. org/10.1080/08985626.2016. 1154984.