Advancing innovation in manufacturing firms: knowledge base combinations in a local productive system

Industry 4.0 requires that manufacturing firms not only innovate but also generate more radical and different varieties of innovation, often incorporating new types of knowledge. To advance such types of innovation, several studies in Innovation and Economic Geography foreground that firms need to combine knowledge in novel ways. The contribution of this paper is to investigate in-depth how manufacturing firms with traditional roots combine new generative knowledge in and beyond a local productive system (LPS), what enables them to access and integrate such knowledge from external sources, and how this relates to the firms’ innovation performance, with a focus on radical and varied forms of innovation. Findings show that firms standing out in terms of innovation performances combine complementary types of knowledge through internal and external sources, particularly at national and international levels. Moreover, firms that have complementary knowledge internally are able to access new knowledge beyond the borders of the LPS.