Abstract

We investigate how intra-cluster knowledge exchange affects the frequency of product innovation. Based on self-administered survey data of digital SMEs from Bournemouth and Poole regions of England, this study shows that digital firms that sustain both temporary and prolonged relationships with outbound employees have a higher probability of introducing frequent product innovation. Moreover, while cognitive proximity and the use of external knowledge providers increase the probability of frequent product innovation, geographical proximity reduces it. Our findings suggest that managers of young digital firms with limited resources in peripheral regions should ‘act near’ before reaching out.