Social capital and regional innovation: evidence from private firms in the US

ABSTRACT

In this study we investigate whether and to what extent social capital may affect regional innovation by focusing on private firms in the United States. We document that regional social capital is positively associated with the quantity, quality and novelty of county-level innovation by private firms. In addition, we find that the positive relation between social capital and regional innovation is more prominent in counties with a lower supply of financial capital. We also report that social capital is complementary to investments in research and development to produce inventive outcomes in local areas. Using a spatial Durbin model, we provide evidence that regional social capital has significant spillover effects in boosting the innovation activities of neighbouring counties.

KEYWORDS:

• social capital
• innovation
• private firms
• spillover effect

JEL:

• O31
• R11
• R12

ACKNOWLEDGEMENT

The authors wholeheartedly dedicate this paper to Professor Nada Kobeissi, who left us in 2020.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.