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Understanding the Inputs into Innovation: Do Cities Substitute for Internal Firm Resources?

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Author Info

  • Chris Forman
  • Avi Goldfarb
  • Shane Greenstein

Abstract

"We examine whether there is a trade-off between employing internal (firm) resources and purchased external (local) resources in process innovation. We draw on a rich dataset of Internet investments by 86,879 US establishments to examine decisions to invest in advanced Internet technology. We show that the marginal contribution of internal resources is greater outside of a major urban area than inside one. Agglomeration is less important for firms with highly capable IT workers. When firms invest in innovative processes they act as if resources available in cities are partial substitutes for both establishment-level and firm-level internal resources." Copyright (c) 2008, The Author(s) Journal Compilation (c) 2008 Blackwell Publishing.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 17 (2008)
Issue (Month): 2 (06)
Pages: 295-316

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Handle: RePEc:bla:jemstr:v:17:y:2008:i:2:p:295-316

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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Cited by:
  1. Martin, Ludivine, 2009. "Understanding the implementation of e-business strategies: Evidence from Luxembourg," MPRA Paper 13645, University Library of Munich, Germany.
  2. Chris Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Internet and Local Wages: A Puzzle," American Economic Review, American Economic Association, vol. 102(1), pages 556-75, February.
  3. Vladimirov, Zhelyu & Simeonova-Ganeva, Ralitsa & Ganev, Kaloyan, 2012. "Interaction of leading and supporting factors for the SME competitiveness," MPRA Paper 37251, University Library of Munich, Germany.
  4. David Dranove & Christopher Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Trillion Dollar Conundrum: Complementarities and Health Information Technology," NBER Working Papers 18281, National Bureau of Economic Research, Inc.
  5. Arora, Ashish & Forman, Chris & Yoon, Ji Woong, 2010. "Complementarity and information technology adoption: Local area networks and the Internet," Information Economics and Policy, Elsevier, vol. 22(3), pages 228-242, July.
  6. Chris CM Forman & Nicolas van Zeebroeck, 2012. "From wires to partners: How the Internet has fostered R&D collaborations within firms," ULB Institutional Repository 2013/105990, ULB -- Universite Libre de Bruxelles.
  7. Vásquez-Urriago, Angela & Barge-Gil, Andrés & Modrego, Aurelia, 2014. "Which firms benefit more from being located in a Science and Technology Park? Empirical evidence for Spain," MPRA Paper 55130, University Library of Munich, Germany.
  8. George Deltas & Seung-Hyun Hong, 2009. "Heterogeneity and Information Spillovers in Web Service Sourcing," Working Papers, NET Institute 09-20, NET Institute, revised Sep 2009.
  9. Chris Forman & Avi Goldfarb & Shane Greenstein, 2014. "Information Technology and the Distribution of Inventive Activity," NBER Chapters, in: The Changing Frontier: Rethinking Science and Innovation Policy National Bureau of Economic Research, Inc.

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