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Public cluster policy and firm performance: evaluating spillover effects across industries

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  • David B. Audretsch
  • Erik E. Lehmann
  • Matthias Menter
  • Nikolaus Seitz

Abstract

While the direct positive effects of public cluster policy on subsidized industries are beyond controversy, the impact of such policy interventions on non-subsidized industries within the same region, that is, the indirect effect of public cluster policy, remains vague and unexplored. This study examines the impact of a prominent public cluster policy in Germany, the so-called Leading-Edge Cluster Competition. Based on a unique dataset, we analyse the spillover effects of this cluster policy initiative on those firms and industries, which have not been the primary target of the cluster policy. Our results suggest that public cluster policy seems to have an indirect negative effect on firms that have not primarily been related to the targeted industries; therefore, the concept of ‘agglomeration shadows’ might also apply to industries and related firms. Despite the existence of knowledge flows induced by additional governmental funding within a region, non-subsidized industries, that is, non-targeted firms, seem to be unable to compete against targeted industries and, therefore, suffer from a lack of human, financial and social capital. Based on our findings, we propose policy recommendations on how to best identify policy instruments aimed at augmenting innovation-driven growth across a broad spectrum of industries and regions.

Suggested Citation

  • David B. Audretsch & Erik E. Lehmann & Matthias Menter & Nikolaus Seitz, 2019. "Public cluster policy and firm performance: evaluating spillover effects across industries," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 31(1-2), pages 150-165, January.
    • Handle: RePEc:taf:entreg:v:31:y:2019:i:1-2:p:150-165
    DOI: 10.1080/08985626.2018.1537153
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    Citations

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    Cited by:

    1. James Wilson & Emily Wise & Madeline Smith, 2022. "Evidencing the benefits of cluster policies: towards a generalised framework of effects," Policy Sciences, Springer;Society of Policy Sciences, vol. 55(2), pages 369-391, June.
    2. Magnus Henrekson & Anders Kärnä & Tino Sanandaji, 2022. "Schumpeterian entrepreneurship: coveted by policymakers but impervious to top-down policymaking," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 867-890, July.
    3. Henrekson, Magnus & Lakomaa, Erik & Sanandaji, Tino, 2021. "The Interaction of Schumpeterian Institutional Entrepreneurship and Hayekian Institutional Change in Innovative Industries," Working Paper Series 1409, Research Institute of Industrial Economics.
    4. Blandinieres, Florence & Krieger, Bastian & Pellens, Maikel, 2021. "Cluster support activities in the German biotechnology sector," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 233052, September.
    5. Yuri Jo & Won Young Chung & Daeho Lee, 2020. "The capability‐enhancing role of government‐driven industrial districts for new technology‐based firms in South Korea," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 7(3), pages 306-321, September.
    6. Madeline Smith & James R. Wilson & Emily Wise, 2020. "Evaluating clusters: Where theory collides with practice," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(3), pages 413-430, June.
    7. Audretsch, David B. & Lehmann, Erik E. & Menter, Matthias & Wirsching, Katharine, 2021. "Intrapreneurship and absorptive capacities: The dynamic effect of labor mobility," Technovation, Elsevier, vol. 99(C).
    8. Erik E. Lehmann & Matthias Menter & Katharine Wirsching, 2022. "University spillovers, absorptive capacities, and firm performance," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 125-150, March.
    9. Tong Tong & Norzalina Binti Zainudin & Jingwen Yan & Azmawani Abd Rahman, 2023. "The Impact of Industry Clusters on the Performance of High Technology Small and Middle Size Enterprises," Sustainability, MDPI, vol. 15(12), pages 1-16, June.

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