THE EXPLORATION OF TECHNOLOGICAL DIVERSITY AND THE GEOGRAPHIC LOCALIZATION OF INNOVATION

This paper examines the innovative ability of small firms in the semic onductor industry regarding their exploration of technological diversi ty and their integration within local knowledge networks. Through the analysis of patent data, we compare the innovative activity of start-u p firms and larger firms. We find that small firms explore new technol ogical areas by innovating in less 'crowded' areas. The analysis of pa tent citation data reveals that small firms are tied into regional kno wledge networks to a greater extent than large firms. These findings p oint to the role of entrepreneurial firms in the exploration of new te chnological spaces and in the diffusion of their accumulated knowledge through local small firm networks.