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Death of distance and agglomeration forces of firms in the urban e-economy : an artificial intelligence approach using rough set analysis

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  • Geenhuizen, Marina van

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Nijkamp, Peter

Abstract

The present study addresses the relevance of geographic proximity for companies in our age of advanced ICT. Many visions of, and speculations on, an increased footlooseness of companies and a concomitant dispersal of urban economic activity have been published in recent years. To identify whether urban agglomeration economies (in particular, knowledge spillovers) are still a key force in preventing such dispersal, we investigate the degree of footlooseness of young, innovative companies. First, we briefly review the traditional theory of agglomeration economies, in particular knowledge spillovers. Next, we connect this theory with more recent resource-dependence views. We then present the results of an empirical analysis of young, innovative companies in various city regions in the Netherlands. The selected innovative sectors are medical biotechnology, ICT services, and mechatronics (optronics), and do not include consumer-oriented activities. The exploratory analysis based on interviews with 21 companies employs an artificial intelligence method, called 'rough set analysis', to increase our understanding of the crucial factors that influence the relevance of physical proximity. On the basis of these results, we argue that agglomeration economies still remain important for various categories of young, innovative firms, even those providing ICT services, but that we need to make a distinction between agglomeration economies that work exclusively in the largest city (i.e. Amsterdam) and agglomeration economies that cover a larger metropolitan area. The only fundamental change in proximity needs among these young, innovative companies originates from a small class of network companies, which are footloose even beyond the larger metropolitan area.

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Bibliographic Info

Paper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0007.

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Date of creation: 2005
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Handle: RePEc:dgr:vuarem:2005-7

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Web page: http://www.feweb.vu.nl

Related research

Keywords: ICT; young and innovative companies; agglomeration economies; proximity; footlooseness; rough set analysis; artificial intelligence;

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  1. Enno Masurel & Peter Nijkamp, 2002. "Motivations and Performance Conditions for Ethnic Entrepreneurship," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 33(2), pages 238-260.
  2. Vohora, Ajay & Wright, Mike & Lockett, Andy, 2004. "Critical junctures in the development of university high-tech spinout companies," Research Policy, Elsevier, vol. 33(1), pages 147-175, January.
  3. Nijkamp, P. & Abreu, M., 2009. "Regional development theory," Serie Research Memoranda 0029, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  4. Audretsch, David B, 1998. "Agglomeration and the Location of Innovative Activity," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 18-29, Summer.
  5. Hoang, Ha & Antoncic, Bostjan, 2003. "Network-based research in entrepreneurship: A critical review," Journal of Business Venturing, Elsevier, vol. 18(2), pages 165-187, March.
  6. Meric S. Gertler, 2003. "Tacit knowledge and the economic geography of context, or The undefinable tacitness of being (there)," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 75-99, January.
  7. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  8. Edward L. Glaeser, 1998. "Are Cities Dying?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 139-160, Spring.
  9. Galit Cohen-Blankenstain & Peter Nijkamp & Kees van Montfort, 0000. "Modeling ICT Perceptions and Views of Urban Front Liners," Tinbergen Institute Discussion Papers 03-023/3, Tinbergen Institute.
  10. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
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