Does regional proximity still matter in a global economy? The case of flemish biotech ventures

Abstract

When internal knowledge bases are insufficient for developing innovations, companies tend to collaborate with external R&D partners. According to a long-standing literature on ‘clusters’, ‘industrial districts’, ‘local production systems’ and ‘regional innovation systems’, geographical proximity between innovation partners is considered a precondition for inter-organizational collaborations: Proximity is said to facilitate trust, the transfer of tacit knowledge, and the intensity of interactions. This article investigates the importance of geographical proximity for R&D collaborations between biotech firms and their innovation partners. Are geographically close innovation partners more likely to collaborate? Studies of the Flemish biotech industry shed light on this question. Regression analyses combined with qualitative interview data reveal that geographical proximity has become less important for inter-organizational collaborations. Due to lower communication and transportation costs, innovation partners can easily collaborate even when they are not situated close to each other. This leads us to conclude that globalization transforms interorganizational collaborations