The knowledge brokers: Venture capitalists, tacit knowledge and regional development

This article reviews the role of knowledge in economic development and the actors through which it is created and transferred. Unpacking the often oversimplified dichotomy between tacit and explicit knowledge, the contribution of firms, communities of practice and regions to the creation of knowledge is considered. While acknowledging the importance of global knowledge flows, it is argued that regional processes of Marshallian interaction and observation retain their relevance even within the decidedly global financial and internet industries. This argument is supported empirically through an analysis of the spatial structure of the knowledge used by venture capitalists during the development of the internet industry. The ability to create and access knowledge proves key for venture capitalists throughout their work, but particularly in (1) selecting promising industries, (2) finding and evaluating firms, and (3) assisting portfolio companies.