The relationship between regional compactness and regional innovation capacity (RIC): Empirical evidence from a national study

Innovation has become a key driver of economic growth, benefitting from knowledge production and technological advancements. Existing literature on the geography of innovation examines agglomeration economies, density, and the diversity of knowledge intensive firms, yet often overlooks the role of urban form. Generally, compact urban form, as opposed to sprawling regions, offers rich amenities, accessibility to public transit and a higher quality of places. Since such features attract educated millennial, the driving force behind knowledge-based and innovation economy, compact regions could be conducive to the innovation capacity. This study builds on Metropolitan Compactness Index (MCI) and examines the relationship between regional compactness and Regional Innovation Capacity (RIC) in the US. Findings indicate that all three indicators of RIC – the average number of patents, firm innovations, and the number of innovative small firms – are positively associated with MCI, while their relationships were significant in two models. Policy implications suggest that sprawling regions could hinder the innovation capacity, while compact regions could remove the physical barriers to innovation generation through offering high quality places and accessibility to urban amenities. This could facilitate social interactions and enhance social capital, while minimizing poverty and segregation. Investment in compact urban forms, thus, deserves greater attention.