Abstract: This study examines the effect of networks derived from the geographical proximity of economic agents on industrial small and medium enterprises' innovation. We designed a proxy to measure firms' innovation through disclosed information from websites. We geo-located economic agents and facilities located near the firms whose physical proximity could affect the firms' innovation. Our results highlight the need to distinguish between inter and intraspecialization and to confirm the proximity paradox in innovation. This study contributes to the identification of geographical elements that should be considered in the design of micro-territorial innovation policies.

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