Microgeography of innovation in the city: Location patterns of innovative firms in Berlin

This paper investigates the micro-location pattern of innovative and non-innovative firms in Berlin using detailed information on the firms' addresses and their local environment. The study employs a unique, representative panel data set of Berlin-based firms from manufacturing and services covering a five-year period (2011-2015) and applying the standard concepts and measurement approaches used in the Community Innovation Surveys. While controlling for firm size, age and sector, we find product innovators and R&D performing firms located closer to research infrastructures, start-ups and other firms from the same industry. They tend to prefer more dynamic neighbourhoods and avoid very densely populated areas. For process innovators, no significant differences from non-process innovators are found. Firms are more likely to introduce new-to-market innovations if other firms in their direct neighbourhood had introduced such innovations in the previous period, but also if firms with such innovations have moved out of their neighbourhood. The 'creative environment' of a firm in terms of bars, cafes, clubs, leisure facilities or cultural locations does not seem to be linked to the innovative activity of firms.