What drives innovativeness in industrial clusters?: Transcending the debate

The paper throws new light on the debate about the role played by local knowledge spillovers (LKS) as a driver of regional innovative activity. It transcends the regional level of analysis that has been commonly adopted in the literature so far, using insights from the evolutionary theory of the firm. This makes it possible to derive a typology of mechanisms through which regional agglomeration may stimulate learning and innovation at the firm level. When this typology is brought to bear on the extant approaches in the debate, the contrasting viewpoints can be reconciled to some extent. The main conclusion is that little theoretical ground for the LKS debate remains.