Advanced Search
MyIDEAS: Login to save this article or follow this journal

Why are some regions more innovative than others? The role of small firms in the presence of large labs

Contents:

Author Info

  • Agrawal, Ajay
  • Cockburn, Iain
  • Galasso, Alberto
  • Oettl, Alexander

Abstract

We study the impact of small firms on innovation in regions where large labs are present. Small firms generate demand for specialized services that lower entry costs for others. This effect is particularly relevant in the presence of large firms that spawn spin-outs caused by innovations deemed unrelated to the firm’s overall business. We examine MSA-level patent data during the period 1975–2000 and find that innovation output is higher in regions where both a sizable population of small firms and large labs are present. The finding is robust to across-region as well as within-region analysis and the effect is stronger in certain subsamples in a manner that is consistent with our explanation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0094119014000266
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 81 (2014)
Issue (Month): C ()
Pages: 149-165

as in new window
Handle: RePEc:eee:juecon:v:81:y:2014:i:c:p:149-165

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622905

Related research

Keywords: Innovation; Spin-outs; Cities; Patents; Firm size diversity; Externalities;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Klepper, Steven & Thompson, Peter, 2010. "Disagreements and intra-industry spinoffs," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 28(5), pages 526-538, September.
  2. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  3. Agrawal, Ajay & Cockburn, Iain, 2003. "The anchor tenant hypothesis: exploring the role of large, local, R&D-intensive firms in regional innovation systems," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(9), pages 1227-1253, November.
  4. William Kerr & Edward Glaeser & Glenn Ellison, 2007. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," Working Papers, Center for Economic Studies, U.S. Census Bureau 07-13, Center for Economic Studies, U.S. Census Bureau.
  5. April Mitchell Franco & Darren Filson, 2006. "Spin‐outs: knowledge diffusion through employee mobility," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 37(4), pages 841-860, December.
  6. Wooldridge, Jeffrey M., 1999. "Distribution-free estimation of some nonlinear panel data models," Journal of Econometrics, Elsevier, Elsevier, vol. 90(1), pages 77-97, May.
  7. Ajay K. Agrawal & Avi Goldfarb, 2006. "Restructuring Research: Communication Costs and the Democratization of University Innovation," NBER Working Papers 12812, National Bureau of Economic Research, Inc.
  8. Michael Noel & Mark Schankerman, 2006. "Strategic Patenting and Software Innovation," CEP Discussion Papers, Centre for Economic Performance, LSE dp0740, Centre for Economic Performance, LSE.
  9. Pakes, Ariel & Griliches, Zvi, 1980. "Patents and R&D at the firm level: A first report," Economics Letters, Elsevier, Elsevier, vol. 5(4), pages 377-381.
  10. Edward L. Glaeser & William R. Kerr, 2008. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," NBER Working Papers 14407, National Bureau of Economic Research, Inc.
  11. Jerry A. Hausman & Bronwyn H. Hall & Zvi Griliches, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0017, National Bureau of Economic Research, Inc.
  12. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(437), pages 925-51, July.
  13. Helsley, Robert W. & Strange, William C., 2002. "Innovation and Input Sharing," Journal of Urban Economics, Elsevier, Elsevier, vol. 51(1), pages 25-45, January.
  14. Rebecca Henderson & Iain Cockburn, 1996. "Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 27(1), pages 32-59, Spring.
  15. Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
  16. Cockburn, Iain M. & Henderson, Rebecca M., 2001. "Scale and scope in drug development: unpacking the advantages of size in pharmaceutical research," Journal of Health Economics, Elsevier, Elsevier, vol. 20(6), pages 1033-1057, November.
  17. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders and Product Cycles," NBER Working Papers 3201, National Bureau of Economic Research, Inc.
  18. Cassiman, Bruno & Ueda, Masako, 2002. "Optimal Project Rejection and New Firm Start-Ups," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3429, C.E.P.R. Discussion Papers.
  19. Anton, James J & Yao, Dennis A, 1995. "Start-ups, Spin-offs, and Internal Projects," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 11(2), pages 362-78, October.
  20. repec:fth:harver:1473 is not listed on IDEAS
  21. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, Elsevier, vol. 23(5), pages 523-532, September.
  22. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  23. Nick Bloom & Raffaella Sadun & John Van Reenen, 2007. "Americans do I.T. better: US multinationals and the productivity miracle," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 4555, London School of Economics and Political Science, LSE Library.
  24. Geroski, P A, 1990. "Innovation, Technological Opportunity, and Market Structure," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 42(3), pages 586-602, July.
  25. Steven Klepper & Sally Sleeper, 2005. "Entry by Spinoffs," Management Science, INFORMS, INFORMS, vol. 51(8), pages 1291-1306, August.
  26. Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, Elsevier, vol. 7(5), pages 545-574, September.
  27. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  28. Lerner, Josh, 2012. "The Architecture of Innovation: The Economics of Creative Organizations," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199639892, October.
  29. Joshua S. Cans & Scott Stern, 2000. "Incumbency and R&D Incentives: Licensing the Gale of Creative Destruction," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 9(4), pages 485-511, December.
  30. Audretsch, David B & Feldman, Maryann P, 1998. "Innovation in Cities: Science-Based Diversity, Specialization and Localized Competition," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1980, C.E.P.R. Discussion Papers.
  31. Mercedes Delgado & Michael E. Porter & Scott Stern, 2010. "Clusters and entrepreneurship," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 10(4), pages 495-518, July.
  32. Cullen, Julie Berry & Gordon, Roger H., 2007. "Taxes and entrepreneurial risk-taking: Theory and evidence for the U.S," Journal of Public Economics, Elsevier, Elsevier, vol. 91(7-8), pages 1479-1505, August.
  33. Noel, Michael D. & Schankerman, Mark, 2006. "Strategic Patenting and Software Innovation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5701, C.E.P.R. Discussion Papers.
  34. Alberto Galasso & Mark Schankerman & Carlos J. Serrano, 2013. "Trading and enforcing patent rights," RAND Journal of Economics, RAND Corporation, RAND Corporation, vol. 44(2), pages 275-312, 06.
  35. Mark J. Garmaise, 2011. "Ties that Truly Bind: Noncompetition Agreements, Executive Compensation, and Firm Investment," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 27(2), pages 376-425.
  36. Michael Noel & Mark Schankerman, 2006. "Strategic patenting and software innovation," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 3727, London School of Economics and Political Science, LSE Library.
  37. repec:rje:randje:v:37:y:2006:i:4:p:841-860 is not listed on IDEAS
  38. Rosemarie Ham Ziedonis, 2004. "Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms," Management Science, INFORMS, INFORMS, vol. 50(6), pages 804-820, June.
  39. Michael Noel & Mark Schankerman, 2006. "Strategic patenting and software innovation," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 4653, London School of Economics and Political Science, LSE Library.
  40. Tor Jakob Klette, 1996. "R&D, Scope Economies, and Plant Performance," RAND Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 27(3), pages 502-522, Autumn.
  41. Lanjouw, Jean O & Schankerman, Mark, 2004. "Protecting Intellectual Property Rights: Are Small Firms Handicapped?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 47(1), pages 45-74, April.
  42. Poterba, James M., 1989. "Capital Gains Tax Policy Toward Entrepreneurship," National Tax Journal, National Tax Association, National Tax Association, vol. 42(3), pages 375-89, September.
  43. Michael Noel & Mark Schankerman, 2006. "Strategic Patenting and Software Innovation," STICERD - Economics of Industry Papers, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE 43, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  44. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
  45. Levin, Richard C & Cohen, Wesley M & Mowery, David C, 1985. "R&D Appropriability, Opportunity, and Market Structure: New Evidence on Some Schumpeterian Hypotheses," American Economic Review, American Economic Association, American Economic Association, vol. 75(2), pages 20-24, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Gerald Carlino & William R. Kerr, 2014. "Agglomeration and Innovation," NBER Working Papers 20367, National Bureau of Economic Research, Inc.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:juecon:v:81:y:2014:i:c:p:149-165. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.