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Do firms in clusters invest in R&D more intensively? Theory and evidence from multi-country data

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  • Lee, Chang-Yang

Abstract

This study aims to evaluate whether firms located in clusters invest more intensively in research and development (R&D) than their non-clustered counterparts. Specifically, it proposes a model of firm R&D and tests empirically its implications for the effect of being located in a cluster on firm R&D intensity. The key ideas underlying the theory are as follows: (1) due either to natural excludability or to a high degree of stickiness of R&D-opportunity-bearing technological knowledge, geographical proximity per se is limited in the (automatic) spillover of knowledge with promising R&D opportunities to nearby firms; (2) geographical proximity may, however, help enhance the effectiveness or efficiency of knowledge exchange through market mechanisms (e.g., through contract R&D, R&D collaboration); (3) potential advantages (or disadvantages) in firm R&D of being located in a cluster also depend on the degree of asymmetry in technological competence among firms located in the cluster. The key ideas are supported by an empirical analysis of a multi-industry, multi-country data set compiled by the World Bank. In particular, the results show that being located in a cluster per se actually has a negative effect on firm R&D intensity, which is in contrast to the conventional wisdom of pure or automatic localized knowledge spillovers, as far as firm R&D intensity is concerned.

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  • Lee, Chang-Yang, 2009. "Do firms in clusters invest in R&D more intensively? Theory and evidence from multi-country data," Research Policy, Elsevier, vol. 38(7), pages 1159-1171, September.
    • Handle: RePEc:eee:respol:v:38:y:2009:i:7:p:1159-1171
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    7. B.G. Jean Jacques Iritié, 2018. "Economic issues of innovation clusters-based industrial policy: a critical overview," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 20(3), pages 286-307.
    8. Gary A.S. Cook & Hans Lööf & Naresh R. Pandit & Börje Johansson, 2012. "The influence of clustering on MNE location and innovation in Great Britain," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Entrepreneurship, Social Capital and Governance, chapter 3, pages 53-82, Edward Elgar Publishing.
    9. BeomJu Park & Chang-Yang Lee, 2023. "Does R&D cooperation with competitors cause firms to invest in R&D more intensively? evidence from Korean manufacturing firms," The Journal of Technology Transfer, Springer, vol. 48(3), pages 1045-1076, June.
    10. Ilona Berková, 2020. "Spatial analysis of financial health of companies," Economics Working Papers 2020-02, University of South Bohemia in Ceske Budejovice, Faculty of Economics.
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    13. Peng Zhang & Canfei He & Yifei Sun, 2014. "Agglomeration economies and firm R&D efforts: an analysis of China’s electronics and telecommunications industries," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(3), pages 671-701, November.
    14. Tomohiro MACHIKITA & Shoichi MIYAHARA & Masatsugu TSUJI & Yasushi UEKI, 2010. "Detecting Effective Knowledge Sources in Product Innovation: Evidence from Local Firms and MNCs/JVs in Southeast Asia," Working Papers DP-2010-08, Economic Research Institute for ASEAN and East Asia (ERIA).
    15. Hervas-Oliver,Jose-Luis & Sempere-Ripoll,Francisca, 2014. "Agglomerations and firm performance: how does it work, who benefits and how much?," INGENIO (CSIC-UPV) Working Paper Series 201411, INGENIO (CSIC-UPV), revised 01 Dec 2014.
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