How can firm benefit from access to knowledge-intensive producer services?

This paper examines variation in a productivity growth within a given location and between different locations. Implementing a dynamic panel data approach on Swedish micro data, we test the separate and complementary effect of innovation and spillovers from the local milieu. Measuring potential knowledge spillover by access to knowledge intensive services, the estimation results produce strong evidence of differences in the capacity to benefit from external knowledge among persistent innovators, temporary innovators and non-innovators. The results are consistent regardless of whether innovation efforts are measured in terms of the frequency of patent applications or R&D investments. We do not find any differences in growth among non-innovative firms across locations, while the growth rate increases with the access to external knowledge for innovative firms and especially for persistent innovators.