The effect of proximity between universities and research institutes and firms on firm innovativeness

Innovativeness is generally considered as a prerequisite for a firm’ssuccess and survival in a competitive business environment. Theproximity between a firm and its knowledge source is often seenas an important contributor to the firm’s innovativeness, butproximity is multidimensional and involves much more than meregeographical proximity, particularly in the internet era. This paperexamines the direct and indirect effects of multidimensionalproximity between firms and universities/research institutes onfirm innovativeness in a weak National Innovation System (NIS)country by considering knowledge interaction as a mediatingvariable. In order to test the hypotheses, structural equationmodelling is performed on data collected from innovative firms inThailand. The results indicate that the organizational proximityand technological proximity between firms and their university/research institute partners play an indirect role in enhancing theinnovativeness of firms through knowledge interactions. Theresults have significant policy and managerial implications.