Social capital and innovation in a life science cluster: The role of proximity and family involvement

This paper investigates the effect of different typologies of a firm’s relationships on innovation performance. Existing literature tends to emphasise the role of social capital in order to acquire knowledge and hence develop innovation. However, the literature is still ambiguous and reports conflicting findings about the effect of social capital on innovation outcomes, thus suggesting the need to examine differences in a firm’s relationships. Findings from a survey conducted on 145 firms belonging to the Tuscan Life Sciences cluster show that: (1) the number of local relationships (i.e. relationships within the cluster) is curvilinearly related to R&D effectiveness (inverted U-shape); (2) the number of distant relationships (i.e. relationships outside the cluster) is positively related to R&D effectiveness; and (3) family involvement positively moderates the effect of local relationships on R&D effectiveness. Post-hoc analyses reveal a three-way interaction between the number of local relationships, number of distant relationships and family involvement, suggesting that family firms are particularly able to take advantage of the combination of local and distant relationships to produce innovation outcomes.