Radical or not? The role of clusters in the emergence of radical innovations

Recently, radical innovations have received increasing attention in order to achieve long-term economic success. Regional clusters, being frequently used as an innovation policy instrument, have been shown to have the potential to support innovations in general. However, it remains unclear whether clusters are really a beneficial environment for the generation of radical innovations. This study aims to shed light on the specific role clusters can play in radical innovation processes. In order to do this, we apply a quantitative approach on the firm-level and combine several data sources (e.g. AMADEUS, PATSTAT, German subsidy catalogue). Our results show that clusters indeed provide a suitable environment for radical innovations. Furthermore, we find that radical innovations rather occur in the periphery of the cluster, where actors tend to be more open to the exchange of external knowledge. This happens in general through linkages with other actors, which we also find to be beneficial for the emergence of radical innovations up to a certain degree. Our findings implicate that policy makers should continue to support clusters and further develop funding schemes. Moreover, managers should be open to collaborations with other actors for the cross-fertilization of knowledge to promote radical innovations.