Producer Service Linkages and Industrial Innovation: Results of a Twelve‐Year Tracking Study of New York State Manufacturers

ABSTRACT This paper documents the results of a twelve‐year tracking study of New York State (NYS) manufacturers of scientific instruments (1994–2005). The main goal of the tracking exercise was to probe for firm‐level changes in the use of external producer services, notably in technical fields such as industrial design, contract research, and engineering. Another goal was to assess the extent to which these outside inputs have been contributing to the product innovation efforts of users. The results show that innovation and service utilization rates have converged across NYS's three major regions (i.e., Western New York, Upstate/Central, and the New York City metropolitan area). This convergence has been powered by Internet‐based technologies, as well as by strategic management change at the company level. The link between recourse to external technical help and successful innovation is found to be statistically stronger in 2005 than it was twelve years ago. Of special importance is the fact that a growing number of manufacturers have been outsourcing research, design, and product development activities at levels that far exceed those reported in the 1990s. The paper concludes with a brief discussion of the implications of these trends for the geography of innovation within high‐technology sectors.