Geography of knowledge sourcing, heterogeneity of knowledge carriers and innovation of clustering firms: Evidence from China's software enterprises

The increasing complexity of innovation has triggered a plenty of studies on external knowledge sourcing and innovation performance of clustering firms. While existing economic geography literature places much emphasis on the geographical dimension of knowledge flows, the relative importance of different types of knowledge sources and their geographical identity in innovation have been largely undervalued. Drawing upon a firm-level questionnaire survey and face-to-face interviews on the software firms in a Chinese regional economy, we reveal that, contrary to the conventional wisdom of distance decay and geographical proximity, no significant difference is found between local and non-local suppliers, customers, and rivals as the external sources of knowledge for firm innovation. Local universities and research institutions are identified by firms as the better and more effective sources of knowledge than others outside of the region. Whereas suppliers and rivals make no significant difference to firm innovation, knowledge obtained from customers is reported to be highly significant to the innovation performance of software firms. Findings of this research cast doubts over the prevailing uncritical and undifferentiated perception of the functioning of geography and inter-firm linkages in the processes of firm innovation as well as the under-socialized understanding of knowledge flows between different agents.