What Determines Technological Hits? Geography vs firm competencies

The centrality of firms vis-à-vis regions underlines a general contrast between two models of producing innovations. This paper uses a new database composed of 4262 european chemical patents applied by 693 firms during 1987–1996 to compare the relative effect of firm and regional characteristics on the production of technological “hits” (highly cited patents). By using extensive controls, the main finding of the paper is that technological hits in the “traditional” chemical sectors are explained only by r&d intensity at the firm level and the scale of the research projects. Firm competencies, particularly technological specialisation, are still important in biotechnology. However, the distinct feature of the biotechnology model is that localised knowledge spillovers also matter