Do organizational and spatial proximity impact on firm performance?

Recent theoretical developments in organization science, economic geography and regional economics have emphasized the importance of organizational and geographical proximity for the performance of firms. Empirical evidence on these relationships is scarce, though. The paper asks to what extent firm-specific resources, network activity proximity and industry factors influence innovative and economic outcomes. We used a theoretical synthesis of regional and organizational science, and economic geography to build a research model that enabled us to derive several hypotheses on the influence of different forms of proximity on outcomes, taking other relevant predictors for performance into account. The empirical findings specify the importance of proximity especially for innovative outcomes. We found that in particular intra- and interregional relations with buyers and suppliers are conducive for firm performance. Moreover, innovation strategy (dis)similarity has interesting effects on relative firm performance. Finally, sectoral research and development spillovers influence outcomes in a positive way.