Cognitive proximity for innovation: Why matters? an applied analysis.

Abstract

The purpose of this research is to deepen the study of the influence of cognitive proximity has on the innovative performance of firms, as well as the mediating effect of potential and realized absorptive capacity in this relationship. For this purpose, an empirical analysis has been carried out. The primary data have been analyzed by means of PLS-SEM technique. The results show that the cognitive proximity of firms has both a direct and an indirect impact on their innovative performance, through their potential and realized absorptive capacity. We conclude that cognitive proximity matters for the innovation performance of firms, as it facilitates the understanding and establishment of positive reciprocity agreements between the companies, especially in terms of knowledge. Nevertheless, firms must develop a great capability to absorb new knowledge to exploit the advantages derived from its cognitive proximity to its stakeholders and leverage all the knowledge within their reach.