The mobility of workers is an important source of regional dynamics, but the effect of mobility on regional productivity growth is not straightforward, as some firms tend to win while others lose from mobility. In the present paper, we argue that the co-worker networks across plants that are established by labour moves are important for both local learning opportunities and job matching quality and should hence facilitate regional growth. We therefore propose a new homophily-biased perspective on co-worker network creation and show that it suits geographical analyses better than random networks do. Moreover, panel vector autoregression models provide systematic evidence that an increase in co-worker network density is positively related to regional productivity growth. This is found to be important even when only ties across plants that are not directly linked by labour mobility are included.

The present article provides an initial systematic analysis of how social networks influence productivity in regional agglomerations. This is accomplished by means of matched employer–employee data for the entire Swedish economy for the period 1990–2008, allowing us to construct a weighted co-worker network with aggregated tie weights on the plant level. We find evidence that increasing density of the plant-level network has a positive effect on productivity, particularly in large regional industry-clusters with high degrees of specialization. Triadic closure of ties is, however, negatively linked to productivity, suggesting the importance of nonredundant knowledge. Moreover, we find only limited support for the notion that the diversity of linkages within or across regions as such is beneficial for productivity. Instead, we show that the degree of specialization conditions the extent to which both linkages to related industries in the region and nonlocal ties are beneficial. Our results thus suggest that having dense social networks is a crucial feature of high-performing agglomerations, and that interindustry, as well as interregional, linkages are compensatory in cases when sufficient industry specialization is absent.

This paper investigates the role of different types of firms in related and unrelated diversification in regions, in particular the extent to which foreign-owned firms induce structural change in the manufacturing capability base of 67 Hungarian regions between 2000 and 2009. Doing so, it connects more tightly the literatures of evolutionary economic geography and international business. The results indicate that foreign-owned firms deviate more from the region's average capability match than domestic-owned firms. However, this deviation is larger on the short run than in the long run, and more pronounced in peripheral regions and in the capital region.