Beyond “buzz”: knowledge interactions, innovation, and neighborhood characteristics

We examine the link between neighborhood characteristics, the importance of knowledge exchange, and firm innovation in Montreal. To this end we combine two sources of data: place-of-residence census data from Statistics Canada and the results of an original firm survey. Through principal component analysis and subsequent clustering, we define five types of neighborhoods. The results revealed that firms assign higher importance to local knowledge exchange when located in dense, walkable neighborhoods with higher educated residents. Knowledge exchange, both local and global, correlates with incremental and radical innovation. Moreover, firms are innovative in any neighborhood, provided they engage in knowledge exchange.