It Matters Where People Live: Innovative Collaborations and the Proximity of Inventors’ Residences

We examine if the geographic proximity of knowledge workers’ residences (i.e., residential proximity) affects the likelihood that they collaborate. We expect that the underlying mechanisms for why proximity in the workplace affects collaboration extend beyond the workplace and hypothesize that residential proximity enhances workplace collaboration. By examining patent outcomes and inventor residential location in the Warsaw, Indiana orthopedic device cluster—a setting that provides many research design advantages to isolate our predicted effect—we find support for this hypothesis. Moreover, we find that the residential proximity effect is manifest for employees in different divisions and manifests among workers of the same gender. This suggests that residential proximity can relax organization-imposed constraints to collaboration (i.e., divisional affiliation) subject to social constraints (i.e., gender differences). Documenting residential proximity as a within-firm agglomeration measure provides a novel theoretical rationale to explain different innovation outcomes between firms and across regions, and it better isolates how social mechanisms stemming from geographic proximity affect collaboration.