Urban agglomerations, knowledge-intensive services and innovation: establishing the core connections

Abstract

This paper investigates how resources available in urban agglomerations influence the organizational form, innovation activity and collaborative linkages of knowledge-intensive business services (KIBS) firms. Compared with their counterparts elsewhere, KIBS located in Norwegian large city labour market regions are more likely to be independent of multi-establishment business organizations and thus reliant on resources available externally, in their locations. This is most pronounced in the central and Western business districts of the capital, wherein independent KIBS exhibit high turnover of professionals and are less inclined to engage actively in innovation. Yet, those that do engage use the capital region economy as a platform for engaging with both domestic and international collaboration partners. Only by consecutively analysing these aspects and accounting for the selection processes involved is the empirical analysis able to uncover contrasting firm-level responses to the same urban economy resource base.

Keywords::

• knowledge-intensive business services
• urbanization
• innovation
• labour mobility
• Norway

Acknowledgements

This article is based on empirical research conducted under the project ‘Innovation modes in Norwegian industry’, funded by Nordic institute for studies in innovation, research and education (NIFU). Funding for subsequent work with the article has been received from the Research Council of Norway under the project ‘Economic Development Paths in Norwegian Regions’ [grant number 209769/H20]. LEED and CIS data was delivered by Statistics Norway, and prepared by Tore Sandven of NIFU. The authors gratefully acknowledge the support received, and the valuable input provided by two anonymous reviewers and the Editor. Yet, the usual disclaimers apply.

Notes

^1. Location quotients: Region share of Norwegian KIBS employment/region share of total Norwegian employment.

^2. Classifications are in accordance with NACE revision 2.

^3. The absolute size of growth recruitment is the difference between gross inflow and gross outflow. The absolute size of replacement recruitment is always the smaller of these two quantities. As an example, consider a firm that employs 20 highly educated professionals at the outset. During the next 12 months, 10 new professionals are recruited (gross inflow) while only 2 leave (gross outflow). In this case, 8 out of 10 new professionals enter because the firm decides to increase this form of employment (gross inflow – gross outflow), while only 2 (gross outflow, the smaller quantity) out of the 10 who enter are recruited to replace those who have left. This is equal to 2 out of the 20 professionals employed at the beginning of the period being replaced during it, and thus a replacement rate of 2/20 = 0.1. If instead 10 professionals leave the firm (gross outflow) and only 2 (gross inflow, now the smaller quantity) are recruited to replace them, the replacement rate is still 2/20 = 0.1 while growth in employment of professionals is negative at − 8/20 = − 0.4. When replacement of professionals occurs during a 1-year period without registered employment of such individuals at the beginning, the replacement rate is set to 1.