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Does Successful Innovation Require Large Urban Areas? Germany as a Counterexample

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  • Michael Fritsch
  • Michael Wyrwich

Abstract

Popular theories claim that innovation activities should be located in large cities because of more favorable environmental conditions that are absent in smaller cities or peripheral areas. Germany provides a counterexample to such theories. We argue that a major reason behind the geography of innovation in Germany is the country’s pronounced legacy of political fragmentation that created a decentralized settlement structure, shaped the geographic distribution of universities and public research institutions, and brought about a rather uniform and local access to finance. We show how political fragmentation influenced the emergence of historic centers of knowledge production and impacts the positioning of innovation activities today. We conclude that institutional factors should play a more prominent role in theories that aim at explaining the spatial distribution of innovation activities.

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  • Michael Fritsch & Michael Wyrwich, 2021. "Does Successful Innovation Require Large Urban Areas? Germany as a Counterexample," Economic Geography, Taylor & Francis Journals, vol. 97(3), pages 284-308, May.
    • Handle: RePEc:taf:recgxx:v:97:y:2021:i:3:p:284-308
    DOI: 10.1080/00130095.2021.1920391
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    1. Michael Wyrwich, 2022. "Historical episodes and their legacies across space: A famous case revisited," Journal of Regional Science, Wiley Blackwell, vol. 62(4), pages 1048-1091, September.
    2. Calvo, Nuria & Fernández-López, Sara & Rodríguez-Gulías, María Jesús & Rodeiro-Pazos, David, 2022. "The effect of population size and technological collaboration on firms' innovation," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    3. Martin Andersson & Johan E. Eklund & Alexandra Tsvetkova, 2023. "Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden," Small Business Economics, Springer, vol. 60(4), pages 1683-1698, April.
    4. Carolina Castaldi & Kyriakos Drivas, 2023. "Relatedness, Cross-relatedness and Regional Innovation Specializations: An Analysis of Technology, Design, and Market Activities in Europe and the US," Economic Geography, Taylor & Francis Journals, vol. 99(3), pages 253-284, May.
    5. Flögel, Franz & Hejnová, Tereza, 2021. "The effects of regional banks on economic resilience during the COVID-19 pandemic and the global financial crisis a cross-country comparison of the European countries," IAT Discussion Papers 21/01, Institut Arbeit und Technik (IAT), Westfälische Hochschule, University of Applied Sciences.
    6. Henriette Ruhrmann & Michael Fritsch & Loet Leydesdorff, 2020. "Smart Specialization Strategies at National, Regional, or Local Levels? Synergy and Policy-making in German Systems of Innovation," Jena Economics Research Papers 2020-007, Friedrich-Schiller-University Jena.

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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