Geographic diversity of knowledge inputs: The importance of aligning locations of knowledge inputs and inventors

Previous studies have found a positive relationship between the diversity of various knowledge input characteristics and innovation but have shown mixed results regarding between geographic diversity of knowledge inputs and innovation. To shed light on the intricacies of this relationship, this study clarifies the role and use of geographic diversity of knowledge inputs by distinguishing between the location of knowledge inputs and firms’ R&D locations. By using data of patented innovations from 325 US biotechnology firms, we introduce the concepts of alignment of the geographic diversity of knowledge inputs with (a) inventor location (direct alignment) and (b) geographic locations of previous innovation collaborators (indirect alignment). The findings offer a more nuanced understanding of the recombinant search logic, showing a curvilinear relationship between the geographic diversity of knowledge inputs and innovation value, and highlighting the central role of direct alignment on innovation value over the secondary role of indirect alignment.