The effect of R&D co-location on innovation activities in Great Britain

This paper analyses the effect of research and development (R&D) co-location on the extensive and intensive margins of innovative activities. To mitigate modifiable areal unit problems, measures of co-location are constructed using distances between plants. The results show that intra-industry R&D co-location has little effect on innovative activities, whereas inter-industry R&D co-location has positive effects, although these tend to diminish as co-location increases. In low-tech industries, the effects of inter-industry co-location are driven by co-location with businesses in related industries, but in high-tech industries, they are the result of R&D co-location with unrelated industries.