Time is the enemy: the speed of proximity-based knowledge diffusion

Does knowledge spread more quickly when firms aregeographically closer? Focusing on knowledge diffusionfrom multinational enterprises (MNEs) subsidiaries in thecontext of the US semiconductor industry, our analysissuggests that the broader MNE patents are, in terms of theknowledge sources they draw on, the slower the speed ofknowledge diffusion to more spatially proximate firms,compared to more distant ones. Moreover, our findingssuggest that this outcome could be attributed to a greaterreliance on knowledge sources that are internal to the MNEnetwork or located geographically distant. We provideinterpretative cues for these findings and provide policyrecommendations in line with our results.