The effects of the frequency of spatially proximate and distant interaction on innovation by Irish SMEs

This paper introduces a new measure to test whether more frequent interaction has a positive effect on innovation by SMEs in the South-West and South-East of Ireland. Based on an original survey, it finds that more frequent interaction increases innovation likelihood, with the probability increasing at a diminishing rate. Distant interaction is more valuable than geographically proximate interaction, although there is a tendency for enterprises to concentrate either on local/regional or national/international interaction. The results question the hypothesis that local interaction is more productive and imply that policy should focus on facilitating SME access to distant agents.