Innovation, Networking and Proximity: Lessons from Small High Technology Firms in the UK

The article explores how the innovative performance of small high-tech firms relates to their external networking activities, and whether geographical proximity in their network relations matters. Data from a small sample of electronics firms and software developers in South East England are used to construct indicators of innovativeness, which are correlated with variables capturing intensity of external interactions and proximity benefits. The regional science base is found to have played a key role in nurturing new high-tech ventures, but science parks had not contributed to this. Interaction with parties with complementary capabilities such as suppliers and service providers is also associated with high innovative performance. However, the findings do not support the current policy fashion of encouraging regional networks revolving around firms in similar business activities and close customer relations.