Mobility and Social Networks: Localised Knowledge Spillovers Revisited

The paper provides a reassessment of arguments and tests in support of the existence and magnitude of localized knowledge spillovers proposed by Jaffe, Trajtenberg and Henderson (1993). We use information in patents to control for the mobility of inventors across companies and space, as well as for the network ties that such mobility helps establishing. Our results indicate that localisation effects tend to vanish where citing and cited patents are not linked to each other by any network relationship. On the contrary, knowledge flows, as evidenced by patent citations, are strongly localized to the extent that labour mobility and network ties also are. We interpret these results as evidence that geography is not a sufficient condition for accessing a local pool of knowledge, but it requires active participation in a network of knowledge exchanges. Moreover, hiring workers from competitors and other firms seems to be a key means to access such a network.