The role of proximity anad knowledge interaction between head offices and KIBS

The extant literature suggests that a mutual dependency exists between head office location and the location of knowledge-intensive business services (KIBS) in major cities and capital regions. This is often referred to as a joint head-office-corporate-service complex. However, few studies have looked into the functioning and outcomes of these complexes. How concentrated are KIBS and head offices in major cities? How important is geographical proximity in the knowledge interaction between head offices and KIBS? What are the actual outcomes of head office-KIBS relationships, especially as far as innovation is concerned? These issues are discussed by using empirical evidence from Norway. The empirical results indicate that geographical proximity in itself is neither a sufficient nor a necessary condition for successful relations between KIBS and head offices in cities. However, agglomeration in city regions can provide positive externalities for both parties. Other types of proximity, such as social and cognitive proximity, also play a vital role in the outcome of KIBS-client relations. There is therefore a certain degree of heterogeneity, but not all projects lead to profound learning and innovation in the actors in this complex.