Isolating the Inter-Personal Mechanisms of Absorptive Capacity

The paper presented in this ZEW Research Seminar returns to the cognitive foundations of absorptive capacity and test the idea that personal experience in a field makes it easier for an inventor to recognize and build upon local knowledge spillovers across firms in that field. Using inventor deaths and differential citations between regions with a deceased and still-living co-inventor(s) of the same patent, the authors first provide causal evidence for the localization of knowledge spillovers across firms. They then establish that inventors with experience in a field are more likely to take advantage of local sources of knowledge, but that the value of absorptive capacity is greatest when they link old knowledge to new fields of technology. Finally, inter-personal knowledge flows within firms do not appear to localize. The authors discuss implications for innovation strategy, location choice as a form of dynamic capabilities, and interpreting the results as evidence for Jacobs’ spillovers.