Abstract
The purpose of this research is to empirically analyze how regional specialization influence innovation in enterprises, as well as the mediation effect of absorptive capacity and cognitive social capital, as knowledge diffusion mechanisms. A questionnaire was developed and distributed, obtaining a sample of 197 energy firms in Spain. For the assessment of this data, the PLS-SEM technique, a multivariate analytical approach, has been used. The results show a positive and significant direct effect between the degree of regional specialization and the innovative performance of firms. In addition, the cognitive social capital and absorptive capacity variables show a positive and significant mediation effect in the relationship proposed, as well as between them, thus constructing a double mediation and proving to be relevant mechanisms for knowledge diffusion. Then, it is concluded that cognitive and geographical proximity matters, since enable firms to obtain resources for knowledge upgrading and innovation. Thus, it is crucial for firms to develop their capacity to absorb new external knowledge, as has been evidenced as a key factor to leverage the opportunities of the context in which firms are located. This paper has important implications for the long-standing complex debates about whether regions should develop, primarily whether they should do so through specialization or diversification.