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This research seeks to investigate just how location impacts on the innovation capacities of knowledge intensive business service (KIBS) firms. Does locating near the main urban centres influence the capacity of these firms to leverage both innovation and financial performance? In this article, we find that location does hold an influence over KIBS firm innovation capacities and it is therefore correspondingly relevant to take firm location into consideration and thereby contributing to the literature on innovation. The results of the econometric models estimated for a sample of 442 KIBS demonstrate location is a variable influencing firm innovation capacity. The closer the location to the larger urban centres, the greater the innovative capacity and financial performance of this firm type. Different levels and types of innovation were also identified by firm location. [ABSTRACT FROM AUTHOR]

This article analyses the importance of two types of innovation and the impact of innovation capacities on financial performance among small and medium sized enterprises (SME) on either side of the border between two countries (Portugal and Spain). Based upon a sample of 61 companies, the results show significant differences in terms of both the drivers and inhibitors to innovation in these two countries. The introduction of products into new markets only proved significant at Spanish companies whilst innovations in both products and processes are significant in both sets of Iberian companies. Furthermore, we were able to classify the companies into two distinct clusters and found that medium sized enterprises engage in the greatest innovation levels and record higher levels of business turnover [ABSTRACT FROM AUTHOR]