The Role of Relatedness and Unrelatedness for the Geography of Technological Breakthroughs in Europe

Abstract

This article proposes a framework to study how the existing knowledge portfolio of regional economies affects the emergence and occurrence of breakthrough technologies. The study discusses the relevance of cognitive distance between the technology of a breakthrough invention and the existing technological base in their geographic vicinity. Theoretically, it introduces the idea that both relatedness and unrelatedness between the technologies in breakthrough inventions and the regional portfolio of technologies can positively influence the appearance of these breakthroughs, but especially relatedness. Empirically, it investigates a sample of 277 NUTS2 regions in Europe in the period 1981 to 2010 and reveals that, by far, most combinations breakthrough inventions make are between related technologies: almost no breakthrough patent combines unrelated technologies only. Regressions show that the occurrence of breakthrough patents in a technology in a region is positively affected by the local stock of technologies that are related to such technology, but such an effect for the local stock of unrelated technologies is not found. However, the region’s ability to enter new breakthrough inventions in a technology relies on the combination of knowledge that is both related and unrelated to such technology.