The role of knowledge-intense high-impact firms in city innovation systems

Past studies on city innovation systems acknowledge the important role of firms, but rarely study them explicitly. This paper shifts attention to the firm level, and proposes that knowledge-intensive high-impact firms are especially important in shaping the economic development of local economies by creating industry-specific micro pathways. This argument follows from their central role in city innovation systems: we propose that knowledge-intense high-impact firms (KIHIFs) have a relatively high absorptive capacity and therefore make better use of knowledge spillover, but also play a role in distributing international knowledge spillover in return. To empirically investigate this thesis, we examine firms operating in the computer-programming activities, and engineering and technical consultancy industries in the capital area surrounding Helsinki, Finland. In line with our theoretical arguments, we find that the relative within-industry concentrations and rates of internationalisation of KIHIFs vary greatly over small geographic distances. Future research and implications for policy-makers are discussed.