This book brings a radically spatialised approach to knowledge creation and innovation. It reintroduces an updated notion of milieu as the conceptual and material space of knowledge and innovation, and takes the reader on a journey through various theoretical approaches to knowledge creation, and how these reflect on an array of European urban developments. Innovation is now considered the main drive behind development, whether in firms, cities or territories, and spatialised knowledge creation its necessary premise. So far, economics have proven ill-equipped to provide the triangulation knowledge-space-innovation with a consistent analytical basis. This is largely due to the discipline’s unwillingness to grapple with the ‘interpretative turn’ which has radically changed, not only humanities and social sciences, but also enterprise praxes and organisational studies. After casting doubts on whether economics is capable of filling such a gap, the book explores the potentialities of a broadly understood hermeneutic approach to knowledge and innovation. The main outcomes are: (i) space is an essential intermediate in the connection between knowledge and innovation, (ii) a renewed notion of milieu provides the triad knowledge-space-innovation with analytical basis and operational power, and (iii) a fresh insight becomes possible on the significance and potentialities of the knowledge economy. A number of empirical investigations on European cases at various scales – organisations, cities, territories − challenge the above statements and suggest directions for policies in the post-modern economy.