The Geographical and Technological Origins of Radical Innovation

Abstract

The purpose of this study was to gain insight in the technological and geographical origins of radical innovation. Theory states that radical innovations are recombinations of technologically unfamiliar knowledge, which are more likely to be conceived in an environment of high geographical proximity. In this research, I investigate the relationship between regional knowledge diversity and radical innovation potential, and the mechanisms behind this relation. I calculated a radicality measure for nearly 50 million patents based on the coherence of their technology classes, and compared this to the regional knowledge diversity of 1400 TL2 and TL3 OECD regions based on 5 million region-assigned patents. The results show that there is indeed a positive relationship between regional knowledge diversity and radical innovation potential. Furthermore the positive influence of technological and geographical proximity on knowledge spillovers is confirmed, as is dependency of an innovation on its evolutionary knowledge base. Finally, the results indicate that, in opposition to theory, radical innovations do not have an increased potential of success, whereas the increased risk of failure was confirmed. This implies that the theoretical beliefs regarding the evolutionary origins of radical innovation can be confirmed. The presumed societal impact of these radical innovations on the contrary, should be questioned, as no proof of increased impact is found in the present study.