Knowledge-intensive Services in Europe: Does Location Matter?

Knowledge-intensive services (KIS) are assuming an increasing importance in innovation, to such an extent that they have even classified as “key agents” within innovation systems (Fischer, 2001). As one of the major features of KIS is coproduction, location is expected to play a significant role on the effects of KIS on regional innovation systems. The objective of this paper is to examine the relationship between the location of KIS and the innovation performance of the European regions. Starting from the results reached by previous studies: Makun and McPherson (1997) for three New York regions, Muller and Zenker (1998) for five German and French regions, Drejer and Vinding (2003) for Danish urban areas or Simmie and Strambach (2006) for large cities of England and Germany, our aim is to widen the traditional scope of the analysis and evaluate the relationship between location of KIS and innovation performance on an European basis. More concretely we try to show that the spatial concentration of KIS in some regions (and particular in capital cities) contributes to foster innovation. To do so we carry out an exploratory spatial analysis for more than 100 European regions. We take as a proxy for the location of KIS the share of employment in KIS in every region. The results obtained support the hypothesis that KIS exert a positive impact on regional innovation performance, an impact that could spill over into the neighbouring regions.