Grasping the complexity of regional knowledge production: Evidence on European regions

Knowledge creation is widely considered as the central driver for innovation, and accordingly, for creating competitive advantage. However, most measurement approaches have so far mainly focused on the quantitative dimension of knowledge creation, neglecting that not all knowledge has the same value (Balland & Rigby, 2017). The notion of knowledge complexity has come into use in this context just recently as an attempt to measure the quality of knowledge in terms of its uniqueness and its replicability. The central underlying assumption is that more complex knowledge is more difficult to be replicated, and therefore provides a higher competitive advantage for firms, or at an aggregated level, regions and countries. The focus of this study is on the conceptual and empirical measurement of knowledge complexity on the regional level of analysis, and on the spatial distribution of complex knowledge created in Europe. We proxy the production of complex knowledge with a regional knowledge complexity index (KCI) that is based on regional patent data. The dataset covers 214 European regions (NUTS-2) from current EU and EFTA member countries. Regionalised patent applications of the most recent five-year period with reliable data (2010-2014) are classified into 35 major technological fields (Schmoch, 2008). The index is comprised - based on the equivalent for economic complexity proposed by Hidalgo and Hausmann (2009) - of two main components: the diversity of a regional patent portfolio, and its ubiquity, jointly defining the degree of complexity of the knowledge produced in a specific region. The initial results are promising as the regional KCI unveils knowledge creation patterns not observed by conventional measures. Not only that complex knowledge is unevenly distributed in geographical space, the results show that regions specialising in complex knowledge are not necessarily those with the highest overall patenting intensity.