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spillovers are defined as the non-appropriable amount of knowledge that is
created by an innovative firm. In the literature, a distinction is made between
knowledge spillovers, rent or market spillovers; which arise then inputs are
nor priced at their true quality, and network spillovers; which arise when
innovations are complementary to existing technologies.


spillovers can be transmitted by three mayor different mechanisms:

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1.     The
first one is “Spin-offs” which form an important mechanism of commercialization
of academic knowledge by locating themselves near to the parent organization,
resulting in a geographical concentration around universities.


2.     The
second mechanism is “The labor mobility”, meaning that the knowledge in
individuals is transferred by moving from one organization to another.


3.     The
last mechanism is “The informal knowledge exchange”, since it often takes place
through social networks, which are to a large extent localized as well. Spillover mechanisms as well as the types of
spillovers are heterogeneous.


The new knowledge and the firms based
in technology have a high trend to locate themselves near universities with the
goal to obtain access to knowledge spillovers, (spillover
effects are locally bounded). This is influenced by different mechanisms such
as research and human capital and the transmission is commonly free
or acquired through a market and its extent depends on whether it is codified
like in patents, or tacit and informal, embodied or disembodied. (Monjon &
Waelbroeck, 2003) Spillover of tacit knowledge has a huge impact over the
geographic decision of the firms. Nevertheless, the collaboration between
universities and industries as one of the knowledge spillover carriers, is not
limited by the regional scale. Therefore, it is expected that the spillovers
occur in more larger distances.

The importance
of this form of knowledge exchange is further apparent from the fact that
cooperation is increasingly important within processes of knowledge creation in
both academia (Wagner-Doebler, 2001) and the private sector (Hagedoorn, 2002).  

The possible
determinants of regional differences in innovation have been analyzed in many
studies over the years, because in the rate of innovation, they are an
important topic in matter of economic geography and policy debates on regional
development. Generally, the presence of public research organizations such as
universities tend to have a large impact on regional innovation due to
localized knowledge spillovers resulting from their research. Universities are considered an important source of located
knowledge spillovers because of their focal point in the generation and
diffusion of knowledge. Regional competitions and university spillovers are
strong supplements when promoting innovative activities for entrepreneurial
firms. According to these insights, many countries have implemented regional
innovation policies based on the presence of universities and research
institutes in a region.

We can see
that spillovers provide benefit to most of the firms that imitate existing
technologies or those that are involved in incremental innovation, in contrast,
highly innovative firms appear to benefit most from collaborative research with
foreign universities.

We speculate
that knowledge emanating from universities is transmitted through formal
cooperation or informally, through publications and discussions among
scientists and engineers at conferences. In the former case, universities can
easily appropriate the rents resulting from innovative activity undertaken by
their research partners. In the latter case, innovative firms benefit form pure
knowledge spillovers. There are many reasons to
believe that there are substantial contagion effects between universities and
companies, especially because there is an open science culture. Unfortunately,
it is difficult to quantify these indirect effects. The standard approach is
based on examining the geographical dimensions of these spills.

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