Knowledge externalities between (un)related firms

This study tests whether in a region with a common knowledge base Marshallian specialization or Jacobian diversification is the best accelerator of knowledge externalities. Therefore a new measure of technological relatedness among firms and organizations is created by extending the technique of co-occurrences of technology codes in patents. This measure is calculated for firms and organizations on the Leiden Bioscience Park, and regressed against labour mobility as indicator of knowledge externality – externality because of its imperfect pricing. Labour mobility is measured by inventor mobility and mobility of members of the Board of Directors. The results indicate that inventor mobility increases when technological relatedness decreases, while Board mobility is not significantly affected by technological relatedness. This implies that when the threshold of the common science base is passed, diversification is more important for firms than specialization, while mobility at the management level is unrelated to the technologies of the firm. Inventors prefer to switch jobs between technologically less related firms, giving them more room to exploit their knowledge. The results add nuances to the general diversification versus specialization debate and give interesting insights into the role of the inventor on the park and the central role of the University of Leiden.