Spatial proximity and market extension in knowledge intensive business services

Spatial proximity plays an important role in explaining the selective birth, survival and growth of KIBS in regional innovation systems and other particular territorial contexts. The literature so far pointed out that proximity plays a key role in this specific sector, given the importance of the interaction with the client. However, spatial proximity may also become a limit to further growth: empirical evidence have highlighted that KIBS firms are increasingly developing interactions outside their local market and even internationalizing. However, a literature and empirical gap still exist in analyzing the determinants of the market extension of KIBS. Using original survey data on more than 500 KIBS located in the Veneto Region, in Italy, this paper contributes to the literature by investigating the factors that affect the KIBS’ market extension. Empirical results confirmed that KIBS that serve local markets differ from those serving the national or international ones for size, innovation capability, network technologies, personnel transfer, network relationship and location in large urban areas but not for the level of service standardization