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This chapter seeks to contribute to the ongoing debate concerning the role of heterogeneity for the innovative capability of industrial districts. With this aim, using a knowledge-based approach, the chapter focuses on different sources of industrial district knowledge heterogeneity and studies how the different level of heterogeneity affects the innovative capability of industrial districts. Four theoretical hypotheses concerning the effects of knowledge and knowledge heterogeneity on industrial district innovativeness are formulated. To test the hypotheses, an econometric analysis on 32 Italian district provinces is applied. Empirical results show that knowledge heterogeneity matter for increasing the innovative capability of industrial districts.
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