Clusters, Innovation and Regional Development

This paper provides a critical examination of the widely disseminated view that innovation in all or most activities is favoured by certain common characteristics in the local ‘milieu’, involving a cluster of many small firms benefiting from flexible inter-firm alliances, supported by mutual information exchanges of both an informal and formal nature. The general applicability of this model, and the localness of crucial linkages, is questioned on the basis of a theoretical analysis of the innovation processes, and relations between actors and their environments, leading to the identification of a range of different hypotheses about the geography of innovation. Examination of new survey evidence from a large number of firms in the London conurbation suggests that the importance of informal information spillovers enabled by spatial proximity for successful innovation is much more limited than has been suggested, both in relation to wider agglomeration economies and to non-local business linkages.