The purpose of this thesis is to analyze how knowledge contained in traded goods influences firms’ demand for labor, and how knowledge-rich routines across space affect the innovative performance in firms and regions.

Four research questions are presented that address how knowledge can travel in space. Each research question forms an individual paper in the thesis and can be read separately. The first part of the thesis gives a general introduction and outlines the theoretical background and motivation for the research questions examined in Papers 1 through 4.

Papers 1 and 2 address how the knowledge composition of the labor force in Swedish manufacturing firms is impacted by changes in imported goods. Paper 1 analyzes imports of capital and intermediate goods and how their quality influences labor demand in different firm size categories. In Paper 2 the analysis is directed toward an examination of how offshoring of intermediate goods affects different occupations. The technology-specific content of the offshored intermediate goods is emphasized.

Moreover, Papers 3 and 4 address how knowledge embodied in exported goods and codified knowledge in patents are affected by changes in new routines. Paper 3 analyzes how firms’ knowledge absorption capacity affects the development, adoption and introduction of new export products among Swedish manufacturing firms. Finally, the focus in Paper 4 is on innovations measured in terms of local patents production in European regions. In this paper, we analyze how the local patents production in a European region benefits both from local R&D inputs in its own region and from spillovers of R&D inputs in other European regions.

In this paper, we give a general introduction to the notion of entrepreneurship and how it has many complex meanings. Entrepreneurs in new firms but also in incumbent firms have a key role in local, regional and national economic development by taking risks to get things done by developing new combinations of ideas and/or doing things differently. In view of this, two of the main questions that are dealt with are: (1) which features make structural differences in institutions and innovation networks remain invariant between decades, and (2) how knowledge about such features can be employed in policy at the national and the regional level. The research questions highlighted in this special issue relate to many pertinent national and regional policy issues. The most apparent concerns conditions conducive for entrepreneurship in the form of new firms and firm growth. In this paper, we also introduce the different contributors to this special issue.

Can import quality affect firms’ labor demand? In this article I analyze how high- and low-quality imports affect labor demand in importing firms in Swedish manufacturing. The largest variation is observed in medium- and large-sized firms. In large firms, an increase in high-quality imports on average reduces the demand for highly educated labor—a substitution effect in production. In medium-sized firms, the effect is the opposite, thus indicating production complementarities. The largest effect, however, is observed in micro-sized firms, where a 1% increase in high-quality imports on average increases the amount of highly educated labor by 0.021%. High- and low-quality imports tend to affect the demand for low-educated labor positively in all firm size categories, hence favoring complementarity effects in production.