Knowledge Spillovers,Competition and Innovation Success

We study the relationship between a patent-based measure of knowledge spillovers that calculates technological proximity based on technologically relevant firms and innovation success. We find – for a representative sample of Swiss firms – that knowledge spillovers have a positive and significant association with the commercial success of innovative products. The paper shows the importance of market conditions for the relationship of spillovers with innovation performance: It is only positive and significant in markets with a medium number of competitors in the main product market, but not in monopolistic or polypolistic market structures.